Zero-day-options, weak technicals and China: Breaking down the market’s August headwinds

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A few signs of market trouble are starting to emerge, making some on the Street feel a tad uneasy.

The S & P 500 is down 4% in August. That puts it on pace for its worst one-month decline since December — when it dropped 5.9%. It would also be the index's first monthly loss since February. And while this is typically a weak time of the year for stocks — August is only the ninth-best month for the S & P 500 going back 10 years, and September is the worst one — there are other trends contributing to the slump.

"The S & P is not quite there, but we would be very surprised if it doesn't follow the NDX's lead." Meanwhile, the S & P 500 on Tuesday closed below its 50-day moving average for the first time since March, indicating the potential for more downside pressure. China Recent data out of China has been less than stellar. Earlier this week, the country reported retail sales grew by 2.5% in July from the year-earlier period . That was well below a Reuters forecast of 4.5%.

 

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