Stocks just signaled a MAJOR warning.
The 21-week exponential moving average (WEMA) is THE dominant trend for the market. Thie line acts as support during bull markets. And it is the first major line to break prior to bear markets/ market crashes.
You can see this clearly during the bull market that occurred during the pandemic. Time and again, the S&P 500 respected the 21-WEMA, signaling that the bull market was intact.
Indeed, it was only once the S&P 500 broke below the 21-WEMA in late 2021/ early 2022, that stocks began to get into serious trouble. What followed was one of the worst bear markets in history with stocks erasing 20% of their value in less than a year. Please note that throughout that bear market, the 21-WEMA acted as overhead resistance, with stocks struggling to break above this line.
I bring this up because the S&P 500 closed below its 21-week exponential moving average (WEMA) last week. This is the first violation of this line since the 2025 bottom. And it is a MAJOR warning that the market is in danger of a major breakdown/ bear market.
