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What US Stock Market Crash? S&P 500 Tests 3,000


Sep. 4 2020, Updated 6:53 a.m. ET

  • After the crash in February and March, US stock markets rebounded in April. US stock markets have been trading with gains in May as well.
  • The Dow Jones Index and the S&P 500 Index are still in the red for the year. However, the Nasdaq Composite Index erased its 2020 losses last week. The S&P 500 is also approaching the golden cross, which is a key bullish technical indicator.
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US stock market crash

In February and March, the US stock market crash dominated the news. We saw the fastest bear market on record. Overall, a 1,000-point daily crash became the new reality for the Dow Jones Index. Markets bottomed out on March 23 and the Dow Jones Index erased all the returns under Trump’s presidency. The S&P 500 fell by more than 12% in March.

Dow Jones and S&P 500 rebounded in April

The recovery has been equally swift. April was the best month for the Dow Jones Index (NYSEARCA:DIA) and the S&P 500 (NYSEARCA:SPY) since 1987. However, May started on a bearish note. Historically, May hasn’t been a good month for US stock markets. While some observers said that US stock markets would form a double bottom, the phenomenon has been elusive so far. US stock markets have recouped their losses for May and are positive for the month. The Nasdaq Composite Index (NASDAQ:QQQ) erased its 2020 losses last week led by gains in tech stocks.

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S&P 500’s key technical level

The markets closed with gains last week, while the S&P 500 closed at 2,929. The Index is slightly short of the psychological 3,000 level. Also, the S&P is approaching its 200-day moving average. On May 8, the S&P 500’s 200-day moving average was 3,002. Prices crossing over the 200-day moving average are a bullish indicator. The movement is known as a “golden cross.” In contrast, if the stock prices fall below the 200-day moving average, traders see it as a bearish indicator. The movement is called a “death cross.” The S&P 500 fell below its 200-day moving average on February 27.

US stock market: Fundamentals versus technical analysis

While markets have been strong, not everyone is convinced about the sustainability. Many fund managers and analysts expect US stock markets to crash due to weak fundamentals. Meanwhile, markets have recouped a large part of their 2020 losses. The S&P 500 is down only about 13.5% from its 2020 high. However, economic indicators tell a scary tale of the pandemic’s impact. Read US stock Markets: What Are Bears Up Against? to learn more.


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