The S&P 500 is down 5.5% this month and volatility is rearing its ugly head. This is a good time to get some perspective by putting the move into context. My goal is to see the forest, as opposed to a few trees. First, we need to know if we are in a long-term uptrend or long-term downtrend. Once we know this answer, we can answer the second question. Is the current decline a primary or secondary move? Let’s start with the long-term trend. The chart below shows the S&P 500 with the 5-day SMA (green) and 200-day SMA (red). First, note that the index hit a new all time high in March. For those keeping score at home, this is less than a month ago! SPX is also well above the rising 200-day SMA and the 5-day SMA is 7.5% above the 200-day. These items suggest we are in…
