How Low Could The S&P 500 Go?

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…

I’ve 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 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’s bull in a China shop policy style.

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 technically in the bag because the US stock market clung to last-ditch daily chart support, as per the marginally favored short-term NFTRH view. So all of we bear callers need to remember that as ugly as the charts are, support is not broken until it is… broken.

I was going to cover this in NFTRH 530‘s Opening Notes segment, but why not make it a public post and save NFTRH’s 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.

Below is a chart from the NFTRH Market Internals segment 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.

So let’s 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’ve been chronically for much of the last year in the Macro Amigos updates

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