Warning: The ‘stealth bear market’ is about to show its teeth
By Victor Reklaitis
MarketWatch.com
Jan 4, 2016
The new year is beginning with a mauling for many investors, as Chinese stocks fell so sharply Monday that they triggered a trading halt.
Following China’s lead, Dow futures have wallowed more than 300 points in the red. “Investors are not going to like the start of this year,” says Naeem Aslam, AvaTrade’s chief market strategist, in a note.
Today’s call of the day fits the bearish mood that’s dominating 2016’s first trading session in the early going.
The new year brings a “possibility that the ‘stealth bear market’ we have been in for 6-9 months is revealed as a true bear market,” says Jonathan Krinsky at MKM Partners in a note.
MKM’s chief market technician warns the median stock in the Russell 3000 RUA, -1.94% , which represents 98% of the U.S. stock market, is “now down over 20% from its 52-week high.” So his shop’s “base case for 2016 is that the weakness seen at the stock level finally makes its way to the cap-weighted index level,” meaning main benchmarks like the S&P 500 SPX, -1.96% and Nasdaq COMP, -2.40% . More from Krinsky below.
The key level of 1,900 is where a slumping S&P 500 could find buyers, says Ari Wald, technical analyst at Oppenheimer & Co. He sees the index falling to that spot in the first quarter, but he’s then bullish for the rest of the year — predicting the S&P ends 2016 at 2,250 after closing out 2015 at around 2,044.
The Rest…HERE
