Market Watch: Damage Done to the Stock Market is Much, Much Worse Than Anyone is Talking About

Article by Mark DeCambre on WSJ Market Watch

Prominent market technician Ralph Acampora says the stock market is in bad shape and it’s worse than many on Wall Street investors appreciate.

A pioneer in the field of chart-based trading, Acampora said the technical damage that has resulted in the Dow Jones Industrial Average and the S&P 500 index erasing all of their gains for 2018, and the Nasdaq Composite Index falling into correction territory—usually characterized as a decline of at least 10% from a recent peak—will take months to repair.

“From a technical perspective, the damage that has been done technically to the stock market is much, much worse than people are talking about,” he told MarketWatch in a phone interview on Tuesday.

Acampora cited a breakdown of so-called FANG stocks—a quartet of technology and internet-related companies that include Facebook Inc. Amazon.com Inc. Netflix Inc. and Google-parent Alphabet Inc. —as the clearest sign that the worm has turned on the bull market.

On Monday, those names, which have been significant catalysts for market sentiment and price moves, shed a combined $120 billion in market value. On top of that, Amazon became the most recent of that group to close in bear-market territory, defined as drop of at least 20% from a recent peak.

“I’ve been a bull for a long, long time and like everyone, I was waiting for a correction but this is something different,” said Acampora, who many chartists refer to as the “godfather” of technical analysis.

“All the leadership is getting crushed,” he said.

Acampora said he believed that the entire stock market itself would go into a bear market and said the current dynamic in the market was eerily similar to the stock-market crash of 1987, when the Dow slide a historic 22.6% in a single day on Oct. 19 of that year.

“Honestly, I don’t see the low being put in yet and I think we’re going to go into a bear market,” he said.

Acampora isn’t alone in his bearish view. Michael Wilson, Morgan Stanley’s chief U.S. equity strategist, said he believes the market is undergoing a “rolling bear market.” He was among the first to spot fractures in the market’s uptrend.

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