The following article was originally published by Michael Snyder at The Economic Collapse Blog. (Used by permission)
The Stock Market Has Just Done Something That It Hasn’t Done Since 2009
By Michael Snyder in Oct, 2018
We continue to see extremely wild swings on Wall Street. On Monday, at one point the Dow Jones Industrial Average was up 352 points, and then later it was down 566 points. At the closing bell the Dow had officially lost 245 points, and all of this extreme volatility is making investors very nervous. Investors like markets that are predictable, because it is a whole lot easier to make money when things move in a predictable fashion. When things get crazy, a lot of investors pull their money out and wait until things settle down in the marketplace, and that definitely makes a lot of sense. Right now, there is a lot of uncertainty about where things are ultimately headed. Some experts believe that the bull market will resume after this “correction” is over, but others believe that a bear market has now begun. And as you will see below, the fact that the S&P 500 has now broken a major trendline that has not been broken since 2009 is strengthening the case of the latter group.
Many had anticipated that we may see a bounce on Monday, but instead we witnessed another very large decline. According to Zero Hedge, all of the major stock indexes are now officially in correction territory…
- Dow -10.1%
- S&P -10.8%
- Nasdaq Composite -14.4%
- Dow Transports -15.5%
- Russell 2000 -15.5%
Tech stocks got hit harder than anything else on Monday, and at this point they are down 13.3 percent from the peak. Each one of the FANG stocks is now in bear market territory, and many on Wall Street are stunned that this has happened so quickly.
But as I have warned my readers many times, markets tend to go down a whole lot faster than they go up.
The main thing that rattled investors on Monday was news that the Trump administration might slap even more tariffs on Chinese imports…
President Donald Trump’s administration is prepared to announce tariffs on remaining Chinese imports if talks next month between Trump and Xi Jinping do not yield results, Bloomberg reported. Such a move is likely to prolong the standoff between the U.S. and China over trade and is expected to hurt the global economy.
Analysts are also blaming the stock market’s weakness in October on a variety of factors, including worries that U.S. corporate earnings growth has peaked and fears of a U.S. monetary policy misstep by the Federal Reserve.
The Chinese do not respond well to threats and intimidation, and our relations with China are the worst that they have been in decades. This is going to have huge implications for all of us, and this is a major storyline that we will want to revisit again and again in the months ahead.
Getting back to the market, we are starting to see things happen that we have not witnessed since the last financial crisis.
Specifically, the S&P 500 just broke the bull market trendline that had not been violated since the market bottomed out in early 2009. The following comes from Graham Summers…
That’s bad news. But unfortunately it gets worse from here. Stocks have violated the monthly trendline running back to the 2009 for the first time in this bull market.
So when we talk about the bull market ending… we’re not just talking about the 2016-2018 run… we’re talking about THE ENTIRE bull market running back to the 2009 bottom.
You can see the chart that he is referring to right here. The fact that this trendline has now been broken is a huge sell signal, and it is yet another indication that a new financial crisis has begun.
And it isn’t just the U.S. that is in trouble. In fact, the U.S. is still in much better shape than the rest of the world.
Right now, approximately 58 percent of the 2,767 stocks listed on MSCI’s global index are officially in bear market territory.
Things have deteriorated so rapidly that even Jim Cramer of CNBC is starting to talk like a bear…
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