Has the S&P 500 Begun a Bigger Correction?

January 14, 2014

In 1998 the S&P 500 (^GSPC) lost 4.4% into its January 12 close. This was the last time the S&P 500 recovered from losses far into the month.

Since 1928, the S&P 500 recovered early January losses only 29%. When early losses were less than 2%, the S&P 500 recovered 37.5% of the time.

These stats are not entirely without merit, because 76.6% of the time (since 1950), as January goes so goes the year.

But let's take a look at the S&P 500 chart. So far, the 2014 down days are just a small blip on the chart.

Nevertheless, we see that the S&P 500 (SPY) ‘blipped’ out of a tight one-week trading range and sliced below initial support at 1,823 yesterday ... a rallied back above 1,823 today.

1,810 seems to be a major inflection point for the S&P 500. There are two reasons why bulls may be able to pull out a 'stick save' here:

  1. The S&P 500 didn't quite touch our ideal Fibonacci up side target.
  2. The S&P 500 has not moved below 1,810.

Inflection points are sweet spots for investors, because they often provide low-risk trading setups.

Identifying and taking advantage of inflection points is almost like insider trading. It gives you an edge. Here’s how to get an edge over the ‘herd.’

Insider Trading Just Became Legal – How to Get Your Edge

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (stocks, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

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