The S&P 500 Ignoring the 200 Day Moving Average Like Something Crazy

Asset classes across the board are pumped up in 2021 and the U.S. stock market may be the most pumped of all.

It has been a minute since I've looked at the S&P 500 chart as crypto occupies the majority of my chart reading time.

I did see something quite interesting that lends to the idea of the market being overbought and extended.

200 Day MA where are you???

Looking at the chart above you will see the 200 day MA (red line) and the wide gap between it and the price of the S&P 500 index.

The last time price touched the 200 day was almost a year ago, which is quite the stretch. You can look back over the past few years and see that the current run is quite outsized. Back in 2017 there was a 5-6 month period where price stayed pulled away before touching the MA.

Furthermore, the move off the covid bottom is quite astonishing. Now, don't get me wrong, there are plenty of reasons for this push, mainly the exorbitant amount of money the gov't flooded into the system.

The point of this post is to recognize the technical scenario and realize that price has and always will meet that 200 day MA at some point.

Its not a matter of it, but when. When can be a lot further away then we ever expect though, as I suspect it already is.

How we see a revisit of the 200 day will be the more interesting part. Will it be a sell off and drop or will it be a long consolidation as the MA catches up.

We really won't know until after it happens. Either way the index is up nearly 100% since the covid bottom in just over a year. It is very hard for me to be bullish, but I will not fight it either. Learned that lesson fighting it last year.

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