S&P 500 poised for a true correction?

<p>The S&P 500 index (daily chart shown below) hit a new intraday high of 1883 exactly one week ago, closing on March 7th at a […]</p>

The S&P 500 index (daily chart shown below) hit a new intraday high of 1883 exactly one week ago, closing on March 7th at a record closing high of 1878.

Since that new all-time height was reached, the US equity index has spent much of this week pulling back to less lofty levels.

The last time that the S&P 500 pulled back significantly was in late January, when it fell from a high of 1850 down to a low of 1737, for a 6% bearish retracement.


S&P 500 chart 14.03.14


This fell short of qualifying as the true correction that many were expecting, which is usually defined as a decline of 10% or more.

While the long-term bullish trend is still strongly intact at the moment and the index is trading well above major technical levels; including both the 50-day and 200-day moving averages, a deeper pullback or correction from the currently well-overbought levels should soon be due.

A true correction from the current record high would place the index below the 1700 level.

Before such a low could potentially be hit, however, key support areas around 1800 and 1735 would need to be breached, not to mention the 200-day moving average, which has not been broken down since late 2012.


Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.