Equity Indexes All Make New 52 Week Lows
Following the expected interest rate hike yesterday, EVERY MAJOR STOCK MARKET INDEX MADE NEW 52 WEEK LOWS. The anticipated BEAR MARKET is asserting itself with a vengeance. Nearly 1000 stocks made new lows as well. This is NOT a “Correction”.
Many observers continue to fail to observe what is becoming more obvious. The Wall Street definition of BEAR MARKET is a decline from highs of 20 % or more, whereas a “Correction” refers to 10% drops. Under this “arbitrary” rule-of-thumb, most indexes are still just “Corrections” in an ongoing Bull Market.
Using the 20% criterion, only 3 indexes are in “BEAR MARKETS”. Small Caps and Transportations have fallen into “official” Bear territory, while the majority of indexes have yet to drop the requisite 20%.
The Slide Show below shows the extreme technical damage now suffered by the major equity indexes.
The key takeaways from the Charts are the following:
- The Equity Indexes are now all in Sync on the downside. Each has broken key support levels which tracing the same topping pattern we’ve observed all throughout the markets.
- The larger capitalization indexes have entered what we refer to as the “Waterfall Zone”. This is a trading “air pocket” created by NEW Support levels WELL BELOW the ones just broken. The indexes have unusually high risk of losing another 15-30% IN A HURRY.
- Smaller Capitalization stocks, which led on the upside, are now the leaders on the downside.
“Stock Markets Poised For Waterfall Decline?” (https://markonomics101.com/2018/12/09/stock-markets-poised-for-waterfall-decline/).
Stock Market Indexes Have Retraced Much of Their Post-Election (2016) Rally
Because of the reluctance by Wall Street analysts to use the term “BEAR MARKET”, most investors still believe this is just another “Correction”. The Dow Jones Industrials and Standard & Poor’s 500 are still within 15% of their all time highs.
Some indexes, such as the New York Composite, S & P Midcap and Russell 2000 have retraced nearly their entire gain since the 2016 Election, when stocks took off and never looked back. The Russell 2000, for example, has RETRACED 80% of its nearly 2 year advance!
The Table below summarizes the performance and behavior of the Major Equity Indexes to date:
Index Nov. 2016 High Dec. 19th Close High Nov. 2016
Dow Jones Ind. 18,500 27,000 23,323 -14% +26%
S & P 600 Midcap 1,550 2,050 1,666 -19% +7.5%
Nasdaq 100 4,800 7,700 6,341 -18% +32%
New York Comp. 10,750 13,000 11,372 -16% +5.8%
Russell 2000 1,250 1,750 1,349 -23% +7.9%
S & P 400 Sm. Cap 750 1,100 840 -24% +12.0%
S & P 500 2,150 2,950 2,507 -15% +16.6%
Dow Jones Trans. 8,100 11,500 9,148 -20% +12.9%
Wilshire 5000 22,500 30,500 25,703 -16% +14.2%
Don’t Be Misled By Wall Street Analysts Peddling “Bargains”
One advantage of being as old as the hills is having lived through many BEAR MARKETs and even Crashes. However, many on Wall Street have NEVER experienced one. We inform, we don’t sell and don’t mislead.
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