Market Direction Mid Week Update©

Market Direction: BULLISH alert issued 11/8/2018

The small-cap index death cross forms...

This bullish alert has not moved in the right direction since it was initially made. There are times that the stock market will whipsaw investors. This may be one of those times, as I have watch the indicators for the last 3 days it suggest this bullish alert may be in trouble. Our proprietary model has not changed to signal a bearish alert, but for the time being proceed with caution. Consider sitting on the sideline until the dust has settled. If the current market direction does change we will let our followers know. As of now this bullish alert is under pressure.

A bearish pattern materialized in a closely followed gauge of small-capitalization stocks on Wednesday.

The small-cap Russell 2000 index RUT, -0.81% saw its short-term 50-day moving average fall beneath its long-term 200-day moving average, a formation in an asset that many chart watchers believe marks the point that a short-term decline morphs into a longer-term downtrend (see chart attached).

According to FactSet data, as of early Wednesday, the Russell’s 50-day moving average is at 1,615.24, while the 200-day stands at 1,615.65. Last Friday, MarketWatch reported that the death cross could play out as earlier as this week, given a steady decline in the index. Monday’s sharp, broad-market selloff certainly contributed to the downtrend.

According to Dow Jones Market Data, this is the first time that the 50-day crossed from above its 200-day to beneath that long-term threshold since the close on May 25, 2016.

Shares of smaller companies had climbed more than their larger counterparts because they were viewed as more resilient amid growing concerns about the U.S.’s trade spat with China. Small-cap companies derive the lion’s share of their revenues domestically.

Investors piling in to the Russell 2000 drove the index to a 52-week high of 1,740.75 on Aug. 31. The benchmark is now roughly 13.2% below that recent high.

The Russell hasn’t been as resilient to recent pains as it has been in earlier weeks. Its latest decline comes amid heightened concerns about the pace of rate increases by the Federal Reserve and the strength of the global economy. These are factors hitting the broader market.

On Wednesday, the Russell was down about 0.3% at 1,509.74, while Dow Jones Industrial Average DJIA, -0.81% was losing 144 points and the large-cap S&P 500 index SPX, -0.76% also was trading in the red, with those indexes coming off an ugly October period that drove the Nasdaq Composite Index COMP, -0.90% into correction territory for the first time in two years.

For the year, the Russell 2000 is down 1.7%, while the Dow is set for a year-to-date advance of 1.9%, the S&P 500 is on pace for a yearly gain of 1.4% and the Nasdaq is poised for a return of 3.8% over the past 11 months.

$tockMarketDirection proprietary model is currently BULLISH. We strongly encourage you to monitor positions closely, exercise proper money management strategies and follow us at  $tockMarketDirection for ALERTS we may issue advising a change in the current market direction. Stay tuned and follow us. If you have a testimonial or comment of how this website has helped you we would like to know, email us. Share with a friend.

The all-time high since our initial recommendation to go LONG this market. Here is how the markets have performed:

Stock Market Direction Recommendation (11/8/2018)
Dow	down 29.73 points a 0.11% gain	11/9/18
Nasdaq	down 56.55 points a 0.75% gain	11/9/18
S&P 500	down 12.73 points a 0.45% gain	11/9/18

Related Link: http://www.stockmarket-direction.com/