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Initial Downside Targets Met in Russell 2000 (RUT), NYSE Composite (COMP). More Weakness Coming?

Posted on: Wednesday, December 19th, 2018

From Monday’s (December 17th) Keys To This Week (access requires subscription):

“This week, the most important new development is technical breakdowns in several US stock indexes which collectively target an additional 3% to 6% move lower, depending on the index.  Meanwhile, all of our Asbury 6 key market internals begin the week in negative territory, indicating that conditions are currently the least favorable for adding risk to portfolios/ most favorable for a deeper decline.”

The indexes we were specifically talking about in that report were the S&P 500 (SPX), Russell 2000 (RUT), and NYSE Composite (NYSE). 

  • RUT has since declined by 4.3% from Friday’s (Dec 14th) close to meet our 1350 target today.
  • NYSE has since declined by 3.5% from Friday’s (Dec 14th) close to meet our 11,350 target today.
  • SPX has already declined by 3.6% from Friday’s (Dec 14th) close, and by 7.2% since our December 6th Special Report entitled This Week’s Reversal Threatens A Much Larger Decline.  That forward-looking report appears below.

SPX still has an additional 2.3% to go to meet our 2450 target.


Special Report

This Week’s Reversal Threatens A Much Larger Decline

Posted on: Thursday, December 6th, 2018

Conclusion, Investment Implications, Strategy

Tuesday’s sharp downward reversal from critical overhead resistance at 2817 in the  S&P 500 (SPX) has set up a potentially bearish chart pattern in the benchmark US index.  A sustained decline below SPX 2643 would confirm it and would then target an additional 7% decline to 2450, or a total of 9% from Tuesday’s 2700 close.

Analysis

Chart 1 below plots SPX daily since July along with its 200-day (major trend proxy) and 50-day (minor trend proxy) moving averages.  The red highlights show that the large, directionless gyrations of the past 5 weeks have formed a pattern of investor indecision that is bordered by 2800 above the market and by 2643 below it.

Chart 1

A sustained decline below the lower boundary at 2643 would confirm a bearish resolution to this indecision and would target an additional 7% decline to 2450.


We hope our market analysis helped Asbury Research Subscribers to avoid some of the recent market weakness. Feel free to contact us at any time to discuss our latest research, or your portfolio.