Bruised Stock Bears Bust Out the Charts in Arguing the Top Is In

A chart breakdown in the S&P 500. Signs of complacency in a closely watched options gauge. Weak readings on the economy piling up. All of it is evidence to bears that the rally in stocks is sputtering out.

Equities declined Wednesday for the second straight day — the first time that’s happened this year — as investors once again started fretting over economic growth and just how much more the Federal Reserve might raise interest rates. It’s all been fodder for bears who had been warning that however good the rally thus far this year might have felt — bringing the S&P 500 as much as 4% higher — it wasn’t likely to last.

“Bear markets are like a Hall of Mirrors, designed to confuse investors and take their money,” wrote Morgan Stanley strategists led by Michael Wilson. “We advise staying focused on the fundamentals and ignoring the false reflections.”

The S&P 500 this week butted up against it 200-day moving average at around 4,000, but failed to meaningfully rally above it amid two consecutive days of losses. It was the benchmark’s fifth such attempt over roughly the past year to bust out above the long-term line, according to John Gagliardi at Fidelity Investments.