Hindsight is 20/20. But if you had to make the call now, would you bet the current market drop is a crash or correction?
The SP 500 (PCX: SPY) and Nasdaq 100 (PCX: QQQQ) broke their 200-day moving averages. This is an effective break of their uptrends since last year. The Russell 2000 (PCX: IWM) is close to its 200-day moving average at 627.92.
The SP 500 is now down ~12% from the peak. Yesterday the bellwether index had the highest drop in 2010. Moreover, initial claims in unemployment insurance unexpectedly rose 25,000 to 471,000 last week. This is a scary sign for the US recovery.
So, we are left pondering: Is the rally over? Or, will shorts get squeezed AGAIN? Let us know what you think in the comments below.
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