Earlier today, the S&P 500 was trading 26% below its 200-day moving average. As shown in the historical 200-day moving average spread chart below, this has been an extremely rare occurrence in the S&P 500's history. The index got below 25% in July 2002, September 1974, May 1940, and multiple times in the late 1920s and the 1930s (not even the '87 crash saw the spread this low). As the chart highlights, spreads don't stay down at these levels for long, which means that while we might not go straight up from here, the sharp declines that we have been seeing are due to take a breather for at least a little bit.
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