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I spent a number of years believing that technical analysis, such as astrology, only seemed accurate if you really, really wanted it to. This view changed as it became clear that technicians’ favourite phrase – “price has memory” – is often true.

Technical market factors were front and centre amid last week’s sell-off, to the point where hundreds of portfolio managers were staring in terror at one of the simplest technical indicators, the 200-day moving average, praying that it held. Bloomberg called the 200-day trend line the market’s “last line of technical defence” and, thankfully, this line held.

The first chart below highlights the past 24 months of U.S. market activity. The S&P 500 tested the moving average in late June, 2016, mid-November of 2016, and then twice in rapid succession in recent weeks. The index price held above the line, and bounced higher in all cases. In technical terms, the trend line provided “support” for the index price.

The second chart shows a longer term view of the S&P 500 and 200-day moving average. The clearest example of the 200-day moving average confirming a bear market is the period between October, 2000, and March, 2003.

The U.S. benchmark remained below the trend line for virtually the entire time frame. There were rallies in June of 2001 and March of 2002 that pushed the index value up to the trend line, but it was unable to hold there and quickly fell back. Instead of support, the 200-day moving average formed “resistance” to a sustainable equity rally. Investor anxiety last week represented fears that another multi-year downtrend might begin if the index fell below the trend line.

Moving averages are blunt tools and far from infallible. In August, 2015, and February, 2016, for instance, the S&P 500 plunged well below the trend line, stayed below it for a few trading sessions, and then quickly rallied into another multi-year up-leg in performance. In these cases, the breaching of the trend line from above was a false signal of upcoming weakness.

After a 2017 when global markets set records for low volatility, there’s been two major market selloffs already in 2018. Equities are expensive by any measure, central bank monetary-policy support is being removed worldwide and the FANG stocks (Facebook, Amazon, Netflix, Google) that have led markets in recent years are in the cross-hairs of sellers, suggesting a change in market leadership.

The wild market swings so far in 2018 are an indication that investors are easily spooked, and another test of the 200-day moving average is likely. There will be even more investors watching closely next time.

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