The S&P 500 triggered a rare technical event today, gapping above both its 50D and 200D moving averages simultaneously.
This looked weird to me, so I did some digging.
Since 1950, this specific signal has occurred only four times. In every instance, the index faced significant pullbacks shortly after. The average three month drawdown following the signal is -9.51%, with the worst three month drawdown reaching -12.92% during 2018.
Historically this has always been an exhaustion gap rather than a sustainable rally.
Maybe this time is different.