I\u2019ve been meaning to ask (and possibly) know the answer, 2100-2200 for H1 2019 is your ultimate bear market target or opening act?<\/em><\/p><\/blockquote>\n Opening act. It could be the ultimate target because there is a lot of support at that area and a good solid bear phase could put the Fed on ice and impose some changes to Donald Trump\u2019s bull in a China shop policy style.<\/p>\n So, for now, I see no reason to make dire proclamations beyond that key support level, as so much will depend on incoming information in 2019. At this point, even 2100-2200 is not\u00a0technically<\/em>\u00a0in the bag because the\u00a0US stock market clung to last-ditch daily chart support<\/a>, as per the marginally favored short-term\u00a0NFTRH<\/strong><\/a>\u00a0view. So all of we bear callers need to remember that as ugly as the charts are, support is not broken until it is\u2026 broken.<\/p>\n I was going to cover this in\u00a0NFTRH 530<\/strong>\u2018s Opening Notes segment, but why not make it a public post and save NFTRH\u2019s virtual ink for more immediate issues going on with the markets? Before we dial out to a couple of simple SPX charts showing the prospective downside targets, let's review the situation with a less than simple chart.<\/p>\n Below is a chart from the\u00a0NFTRH Market Internals<\/strong>\u00a0segment that simply says when the weekly EMAs 20 and 50 trigger down, a bear signal would be in effect. This occurred near the beginning of the bear markets that began in 2000 and 2007. Ah, but there were two big-time fake-outs in 2011 and 2015 when harsh corrections failed to deliver anything more from the bear side.<\/p>\n So let\u2019s add some panel indicators to the chart and see what might be different now from 2011 and 2015 and what might be similar to 2000 and 2007. What we find is the SPX\/Gold ratio at our initial (and potentially though not definitively final) upside target as we\u2019ve been chronically for much of the last year in the\u00a0Macro Amigos updates<\/a>.<\/p>\n Amigo #1 (SPX\/Gold) got to the destination. Amigo #3 is the Yield Curve and it is still flattening like a pancake and while you could say it is a very near destination, it has not yet started to steepen and so, is not yet virulent toward stock bulls. In 2007 the stock market did not top until well after the curve steepening began but in 2000 the conditions occurred in unison. All in all, risk is still very high, as it has been for most of 2018, actually.<\/p>\n The other indicator is the 3 mo. T-Bill yield in the middle lower panel. This yield is highly sensitive to and correlated with the Fed Funds Rate. In 2000 it topped out simultaneously with the SPX while in 2007 there was a lag, as with the Yield Curve.<\/p>\n The bottom line is that SPX is in a volatile phase with key moving averages not yet triggered but moving in that direction while the market\u2019s indicators shown below flash \u2018high risk\u2019.<\/p>\n Does all of the above mean we are going bearish? You\u2019ll have to ask a certified guru who\u2019s willing to sign, seal and deliver a handy prediction. But the probabilities by these and many other indicators we follow flash bearish and hence, that is our favored plan. Simple.<\/p>\n So assuming that plan plays out, let\u2019s look at the two primary downside objectives for SPX.<\/p>\n The first is as we\u2019ve been discussing, a measurement of a still hypothetical Head & Shoulders topping pattern that has formed in classic fashion, with the higher high (Head) having come with a significant bearish divergence by MACD and RSI (among several other technical and macro indicators diverging the market).<\/p>\n The beauty here is that the pattern measures right to the target which we have held as logical for other reasons, like the market poetically taking away the gains of the Trump Rally as this bull in a China shop appears to have little more than a rudimentary understanding of how sensitive America\u2019s most progressive businesses are to well functioning global trade.<\/p>\n Target #1:<\/strong>\u00a0It is as it has been, 2100-2200 with the idea that this would simply be a short bear cycle; enough to scare \u2019em all out while the smart money buys at 2100. But the smart money is only smart if it is buying forward fundamentals and I am more than willing to stop and evaluate the situation at that time with little need to bank on one or the other eventualities.<\/p>\n Now let\u2019s dial the chart out to a monthly view. Well, look at that little shelf of support there at 2100. It would only take away about a half of the bull leg from the blue sky breakout in 2013. Again, as a handy reference that was a time when we were ramping up a bullish view on the Semiconductor Equipment industry as an early cyclical indicator. Today, we are almost a year on from clearly stating the opposite view:\u00a0Semi Canary Still Chirping, But He\u2019s Gonna Croak in 2018<\/a>. You can add that as yet another indicator that just maybe this time it\u2019s different (from 2011 and 2015).<\/p>\n So\u00a0if<\/em>\u00a0we go bear and\u00a0if<\/em>\u00a0SPX does not hold the 2100 area,\u00a0then<\/em>\u00a0prepare for a take-back of the entire new secular bull market; an all-too-normal test of the big breakout. Don\u2019t think it can happen? Think again. Who back in 2013 thought that SPX would hit 2900 just 5 years later? Absolutely not me, for one.<\/p>\n So technically its a gambler\u2019s game. Is MACD doing 2000, 2008 or 2015 in its current trigger down condition? And what about RSI? We have previously noted that the long, drawn-out overbought situation in 1995-1998 resulted in the \u201998 correction prior to a big new upside burst to the bubble top before the market finally rolled over. But a shorter spike to overbought in 2006-2007 was met with a terrifying bear market once RSI turned down.<\/p>\n More recently there was the drawn-out overbought situation in 2013-2015, which ended up resolving bullish as happened in 1998. Today we have something similar to \u2013 but even scarier looking than \u2013 2007\u2019s relatively short overbought condition and abrupt drop from overbought.<\/p>\n So there you have it. Some TA mumbo jumbo and some indicators. My friend\u2019s question was an excuse to write a relatively breezy article this week and get to my roots, which is charts and indicators. The two combined have us leaning to the bearish side for the first half of 2019. I am currently straddling the market with a view of a short-term grind (potentially with an upward bias) to finish the weekly pattern\u2019s right side. But as noted repeatedly in\u00a0NFTRH<\/strong><\/a>, the dominant view is bearish.<\/p>\n It\u2019s now on the bulls to prove otherwise and undo the bearish signs that have gathered. They did just that in 1998, 2011 and 2015. But on this occasion, there are some key differences and so, in the event, the bear view proves out, we have a couple of long-term charts showing logical support areas.<\/p>\n Check back to see my next post!<\/p>\n Best, Subscribe to\u00a0NFTRH Premium<\/strong><\/a>\u00a0(monthly at USD $33.50<\/a>\u00a0or a 14% discounted\u00a0yearly at USD $345.00<\/a>) for an in-depth\u00a0weekly market report<\/strong>,\u00a0interim market updates<\/strong>\u00a0and\u00a0NFTRH+ chart and trade setup ideas<\/strong>, all archived\/posted at the site and delivered to your inbox.<\/p>\n You can also keep up to date with plenty of actionable public content at\u00a0NFTRH.com<\/a>\u00a0by using the\u00a0email form on the right sidebar<\/strong>\u00a0and get even\u00a0more<\/em>\u00a0by\u00a0joining our<\/a>\u00a0free eLetter<\/strong>. Or follow via Twitter\u00a0@BiiwiiNFTRH<\/a>,\u00a0StockTwits<\/a>\u00a0or\u00a0RSS<\/a>. Also, check out the quality market writers at\u00a0Biiwii.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Our target for the first half of 2019 is and has been the 2100 to 2200 area for the S&P 500. A friend asked\u2026 I\u2019ve been meaning to ask (and possibly) know the answer, 2100-2200 for H1 2019 is your ultimate bear market target or opening act? Opening act. It could be the ultimate target […]<\/p>\n","protected":false},"author":41,"featured_media":48788,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[1840,3438,4273,9526,3978,102],"class_list":["post-48783","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-biiwiicom","tag-chart-analysis","tag-gary-tanashian","tag-notes-from-the-rabbit-hole-nftrh","tag-sp-500-analysis","tag-technical-analysis"],"yoast_head":"\n![\"S&P\"](\"https:\/\/i1.wp.com\/nftrh.com\/wp-content\/uploads\/2018\/12\/spx.wk_-3.png?w=840&ssl=1\")
<\/figure>\n<\/div>\n![\"S&P\"](\"https:\/\/i1.wp.com\/nftrh.com\/wp-content\/uploads\/2018\/12\/spx.wk2_-2.png?w=840&ssl=1\")
<\/figure>\n<\/div>\n![\"S&P\"](\"https:\/\/i0.wp.com\/nftrh.com\/wp-content\/uploads\/2018\/12\/spx.mo_.png?w=840&ssl=1\")
<\/figure>\n<\/div>\n
\nGary Tanashian
\nBiiwii.com<\/a><\/p>\n