As the 50-day moving average has already been tested and the short-term sentiment is hurt badly, the short term upward trend is not intact anymore, no matter what happens in the next few days. (And of course, a sharp rebound is always in the cards.) However, the thousand billion dollar question is at what levels the program trades with huge stops could be further cumulated triggering another free fall and when the institutional investors feel finally ready to get in again. (Theoretically, they already cut back their average exposure somewhat prior to the tumble according to NAAIM, but it was not yet in a sharply pessimistic territory). The mid-term trend supports at between 2000 and 2250, and who knows where the good old FED-put is.

S&P 500 since 2000

Quelle:, Shark Vision

Nevertheless, I still hold my earlier view: a final break in stock market trends could only occur if most of the following scenarios arise simultaneously:

  • A further significant rise in short-term yields (and probably long-term yields, too).
  • Inflation exceeds the central banks’ thresholds (at least in the expectations).
  • A major shift in companies’ share buyback programs due to rising funding expense, which could potentially trigger offering or sale of own shares.
  • The emergence of problems related to China’s debt and overloaded banking system that political leaders could not or do not intend to maintain and roll over further down the road.