What is the message of the markets?

The Primary Stock Market Trend

In my last market update report in March, “SPY: The death cross and what you need to know,” I laid out the case for a primary downtrend being in force for the S&P 500 and the broader US stock market. Since this time, market prices have confirmed the primary downtrend by falling for seven consecutive weeks. The question now is where do we go from here?

Technical Backdrop: S&P 500

The S&P 500 is unique amongst the major US stock market averages in that it has carved out a head and shoulders top pattern in addition to forming a death cross. Please keep in mind that there is nothing magical about a death cross, as discussed in the prior report, or a head and shoulders formation for that matter. That said, when used in conjunction with the macro environment, corporate fundamentals, and economic trends, technical analysis provides essential context for understanding price trends.

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