Hong Kong stocks rose and Japanese shares fell Wednesday, with trading in most Asian markets turning choppy ahead of Federal Reserve Chairman Ben Bernanke’s congressional testimony later in the day.
Investors must now be concerned with the ability to weather the dual threats of rising interest rates and falling stock prices in an economic environment that has been artificially inflated with cheap money.
One of the ways that we are monitoring the health of the stock market right now is by keeping an eye on the 50-day moving average. This has been a critical level of support for SPY over the last 8 months, which is why a break below that level would be a bearish sign moving forward.
The markets will always favor the upside over the long term because of pure math. The downside risk is 100%, that is the worst case scenario. While your upside is unlimited.