Stocks Drop Hard… What’s Next?
Yesterday’s drop in stocks did a lot of damage to their rally.
Stocks broke down in a big way. As I write this, they’ve broken their bearish rising wedge (blue lines) and have crashed through support (orange line).
This is very bad news.
Throughout all of August and most of early September, I warned that stocks would only hold up until roughly the Fed’s September meeting (September 17-18). Those days formally appear to have marked the recent top.
So what comes next?
Momentum stocks are all suggesting a major breakdown is coming. Netflix, Wayfair, and Tesla – all of them Wall Street darlings – suggest the market could collapse to 2,600 or lower.
Here’s the breakdown in the chart below:
- S&P 500: Light blue line
- Netflix (NFLX): Dark blue line
- Wayfair (W): Orange line
- Tesla (TSLA): Green line
Unfortunately, that’s not the worst of it either…
Real world economic indicators say the market could go even lower.
FedEx, a major global bell-weather, says the market could drop to 2,400. And copper and Treasuries suggest the markets could crash to 2,000.
Here’s the breakdown in the chart below:
- S&P 500: Dark blue line
- FedEx (FDX): Orange line
- Copper: Light blue line
- U.S. Treasuries: Green line
I’m keeping a watch on all of this. And if anything changes, I’ll let you know right here in Money and Crisis.
Best Regards,
Graham Summers
Editor, Money & Crisis
