You can see that both the Dow and the S&P have formed trading ranges during the past month and that the lows of these trading ranges rest right on top of the 50 day moving average in each case. So break below the 50 day moving average would in each case also be a trading range breakout to the downside. Such price action would have very bearish implications, especially if it occurs on high volume, because the Bull market which began from the March 2009 low point is now more than 5 years old. The move up from the European crisis lows in 2011 is 30 months old. No matter how you look at it this bull market is very long in the tooth.
The Fed is committed to eliminating its quantitative easing economic stimulus by the end of this year. This has been the most important prop beneath this bull market trend and once it is removed the natural forces which tend to move stock prices back to long run fair value based on earnings and dividends will reassert themselves.
These facts all suggest that should the Dow and S&P both drop below their 50 day moving averages they will continue downward to their 200 day moving averages and possibly break below them. After such a long bull market, and with the imminent removal of monetary stimulus, this would set the stage for the biggest drop in stock prices since the 2009 low point.
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