For the third week in a row, the stock indexes finished on the downside. The DJIA lost 359 points for the week or 2.2%. The S&P 500 lost 41 points or 2.15%. The Nasdaq lost 158 points on the week or 3.4% and the Russell 2000 lost 38 points or 3.66%.
For the year 2016, the DJIA is down 8.25%, the S&P is down 7.98%, the Nasdaq has lost 10.42%, and the Russell 2000 has lost 11.27%.
The Russell 2000 index has already crashed, down 22% since its June 23, 2015 closing high of 1296.
The big question now is, has the stock market reached a bottom? Nope. We are nowhere close to a bottom in this stock market.
As was clear in the last half of 2015, stock volatility was going to be the theme for 2016. That has been an understatement so far.
This stock market is going to get much worse over the next six months. With the strong dollar and the Federal Reserve raising interest rates (for who knows what reason), there is going to be many more external shocks to the global financial system.
One such shock may be another round of countries breaking their pegs to the U.S. dollar. This may happen sooner rather than later and the stock markets will be caught by surprise. Another leg down may just be around the corner.
Traders and investors need to quickly understand the global, macro events that are happening. By getting the macro events correct, you will get the markets correct.
Attached you will find a daily chart of the Russell 2000 index. This appears to say it all. We are in a bear market and traders and investors need to prepare accordingly.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.