For December, there have only been three up sessions to twelve down sessions. With four sessions left, it is going to be an ugly month and year. 2018 now is down -12.06%. The Russell 2000 is down -17.49%.
The good news is with such a bad year next year has the potential to see strong returns since we have had such a big correction. However, there is a big IF. That if is the S&P 500 and Russell 2000 need to stop their rates of descent.
The measure we are paying close attention to is the retracement from the January 2016 low to the September high. Currently, the S&P 500 is below its 50% retracement of that move. We use SPY as our proxy on the S&P 500.
![[Image 2]](/wsr/images/articles/2018-12-26-11-24-20/spy%20retracement%20dec%202018.jpg)
The 50% retracement on the SPY is 237.48. If SPY cannot get above that number, then the 61.80% retracement comes into play at 224.16. Today SPY has traded to 237.85 so clearly the 237.48 level is being tested.
We will weigh in on today's action tonight as we need for this market to show us that it can rally for more than one hour.
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