Stocks Are Sending a Recession Warning

The Fiscal Times reports:

The technical damage to stock prices has been severe. The S&P 500 has suffered its first "Death Cross" — a plunge of the 50-day moving average below the 200-day moving average, a sign of lost medium-term momentum — in four years. The long-term trend is at risk, as the index closed Monday’s session below its 12-month moving average, a strong predictor of bear markets.


Unless stocks mount a historic charge higher here — ending September 6 percent higher — it could be game over for the bull market. History isn't on their side.

August ended with more than a 5 percent loss on the S&P 500, the worst performance for the month in 17 years and down 7.5 percent from its July high. According to Jason Goepfert at SentimenTrader, after August losses of this magnitude since 1928, September sported a positive return only 4 out of 13 times, posting an average loss of 5.4 percent. When they rallied, stocks only rose above August's close by an average of 1.4 percent. When they fell, the drop averaged 8.3 percent.

In his words, that's the data reveals a "terrible risk/reward ratio" in stocks right now.

Just a reminder.