Key Technical Indicator Suggests Potential 14% Market Drop If History Is Any Guide

Investing with moomoo joined discussion · Jun 8, 2023 04:59

The Bollinger Bands indicator has just delivered a bearish signal for the S&P 500 index, known for accurately predicting past market downturns. Developed by John Bollinger, this indicator helps traders identify oversold conditions and potential trend reversals.

The Bollinger Bands indicator signals a sell when prices reach the upper band (located two standard deviations away from the moving average) and a buy signal when touching the lower band.

Last Friday, June 2, the $SPDR S&P 500 ETF(SPY.US)$ broke through the 4,250 level, exceeding its 50-day moving average by over two standard deviations.

Source: Benzinga

History suggests the U.S. stock market is poised to drop from here. Based on the latest five observations, the S&P 500 bottoms out approximately 35 sessions after a Bollinger Bands sell signal is triggered.

Source: Benzinga

Disclaimer: Past performance does not guarantee future results. This is for information and illustrative purposes only. It should not be relied on as advice or recommendation.

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