The market sell-off has inflicted serious technical damage in exchange traded funds indexed to the S&P 500. The broad-market funds have broken the support trend line from the March 2009 stock bottom after crashing below their 200-day moving average.
Equities were falling Monday after Standard & Poor’s downgraded the U.S. credit rating. “Major technical support levels were broken in all three major averages last week,” wrote David Chojnacki, Street One Financial market technician, in a note Monday.
He pegged 1,175 as major support in the S&P 500, a level it was struggling to hold Monday morning, while short-term resistance is near 1,225.