Here Is Why A Stock Market Sell-Off May Only Be Starting

US Markets

  • S&P 500 -13 points
  • US 10-Year – 2.64%
  • Oil $55.68 -$0.98
  • VIX 17.36
  • Dollar Index 97.47

International Markets

  • China Shanghai -4.4%
  • Hong Kong Shanghai -1.91%
  • Japan Nikkei -2.01%
  • South Korea KOSPI -1.3%
  • Australia ASX – 0.96%
  • German DAX -0.67%
  • UK FTSE -0.97%

Key Events

International Trading

China

The big news overnight is that Chinese exports fell 20% versus a year ago for February. That lead to a steep drop in the Shanghai Composite overnight. So while a 4.4% drop is steep, we should also remember this is China, and it is a volatile market.The pullback isn’t all that surprising, as we noted the other day how the index was looking overbought and was due for a pullback.

It would seem possible that there is still some more downside to this index to at least 2,920 and perhaps as much as 2,825.

shanghai

South Korea

South Korea continues to look very weak, and we have talked about how this index has me greatly concerned. It has now fallen to a critical support level at 2,136, that absolutely must hold for a variety of reasons.The first being the peak in the middle of the double bottom. Secondly, the RSI which had appeared to have broken out is now on the verge of breaking down.

korea

While neither of these two indexes is in danger falling to their December lows, they would at the very least suggest there is more downside risk at this point to equity prices than upside potential over the short-term.

S&P 500 (SPY)

With that, we turn our attention to the S&P 500, which is sitting just above a massive level of support at 2,735. A drop below that level quickly sends the index back to roughly 2715.

S&P 500, spx

Russell 2000

Although it doesn’t sound great to hear this, there is the genuine chance the Russell could fall back to around 1456, from its current 1523, about a 50% retracement from the December low to the recent highs. For all of you that believe in Fibonacci and the golden ratio, the Russell would need to see a retracement of 61.8% before turning higher, which happens to confidence with support at roughly 1,396.

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Disclosure: Michael Kramer and the clients of Mott Capital own Netflix

Disclaimer: This article is my opinion and expresses my views. Those views can change at a moment's notice when the ...

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