The Second Leg of the Market Correction is Unfolding

 

In early December, the S&P 500 fell 5.1% from its recent high to its recent low, in the course of eleven days.  The market rout was spurred on by plunging oil prices.  On December 18th, in an article titled Hold Your Horses, I warned investors that the market was not going to quickly, permanently recover from the December market downturn, saying “While it’s conceivable that stocks could fully rebound in the short-term, I have a strong sense that the markets need to bounce at their recent lows at least one more time before they recover.” 

Typically, a big down day for the S&P 500 is followed by one or two days wherein the market closes relatively flat, followed by another big drop.  Look at the candlestick chart, below.  The pattern from this week is a clone of the pattern from Dec. 10-11.  At that time, the market subsequently  fell another 60 points, or 2.95%, before rapidly turning around.

Watch for a repeat of this pattern.  If you’d like to buy low when the S&P drops below 1980, please subscribe now, then look at my model portfolios for 2015, on the home page.  They feature undervalued growth stocks with bullish charts.

 

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Chart courtesy of StockCharts.com.

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Please send questions and comments to research@goodfellowllc.com.

 

Crista Huff
President
Goodfellow LLC

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