The blue line in the top panel is the S&P 500 index price.
The gray bars in the second panel are the number of days prior to the start of a 5% correction.
The yellow bars in the third panel are the number of days prior to the start of a 10% correction.
The red bars in the fourth panel are the number of days prior to the start of a 20% correction.
The Takeaway: As of yesterday, the S&P 500 has pulled back 6.6%. It took 142 trading days for the S&P 500 to experience a 5% correction, which last occurred in August 2024.
So, what’s next? A 10% correction would bring the S&P 500 down to 5,529. It has been 337 trading days since we last witnessed a 10% correction. This level would essentially return the S&P 500 to where it was at the time of the last 5% correction.
Next is the possibility of a 20% correction, which would bring the S&P 500 to 4,915. It has been 599 trading days since the last 20% correction, which would return the S&P 500 to its lows from April 2024.
Am I worried about this correction? Of course. However, there are some positive signs for the S&P 500; here are the key data points that caught my attention:
The S&P 500 50-day moving average is still above its 200-day average.
S&P 500 price is still above its upwards-sloping 200-day moving average.
RSI readings have not dipped below 30, indicating that the S&P 500 is still in a bullish momentum regime.
New lows stopped expanding on Tuesday.
What do you look at while the market is in correction mode?
Where do you think this current correction will end?
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