Technical analyst Carter Worth of Cornerstone Macro said he expects further declines after Friday’s stock market drop.
Worth pointed to a trendline from the market’s lows in 2016 that stocks have since tested and held above. To reach that line, Worth said, the S&P 500 would have to fall 222 points, or 7.7 percent from its all-time high hit last Friday of 2,872.87.
“That is a very reasonable thing to, I would say, bet on,” Worth said Friday on CNBC’s “Fast Money.” “Whether it happens Monday or whether it happens over time, or whether it takes a long time, I think we can make an assumption that an intermediate high was made.”
A 222-point decline in the S&P 500 would take the benchmark index to 2,650.87, 4 percent below Friday’s close.
The S&P 500 dropped more than 2 percent Friday in its worst day since September 2016 as Treasury yields rose and traders worried about interest rates rising too quickly. The U.S. 10-year Treasury yield hit a high of 2.854 percent, its highest level since Jan. 23, 2014.
“I think the rate thing is not a big deal. I think people know that it was overdone. It was excessively steep, and they’ll use any reason to sell and point to it,” Worth said. “The real truth is banks didn’t act well and that was supposed to happen when rates [rise].”
