Investing.com - Financial Markets Worldwide
Get Premium Data for Cyber Monday: Up to 55% Off InvestingProCLAIM SALE

Stock Market Overbought Correction Develops As Expected

ByErik McCurdy
Published 04/11/2012, 03:29 AM
Updated 07/09/2023, 06:31 AM

The S&P 500 index closed sharply lower again yesterday, confirming the break below support at the lower boundary of the uptrend from October 2011.

For several weeks, we noted that the rally from October was extremely overbought and that the resulting retracement would almost certainly be violent in character. The correction has developed as expected during the last five sessions, with the S&P 500 retracing 31 sessions of gains during the course of one week.

The next meaningful support level is the congestion zone near 1,345, so it is highly likely that the decline from last week will continue down to that area.
SPX CHART
With respect to cycle analysis, the magnitude of the beta phase decline suggests that cycle translation is in question and a close below the last Short-Term Cycle Low (STCL) near 1,340 would signal a likely transition to left translation.
SPX CHART 2
The next STCL will likely form in late April within the window during which the next Intermediate-Term Cycle Low (ITCL) is also expected to develop. Therefore, it is possible that the short-term and intermediate-term lows will occur simultaneously.
SPX CHART 3
Now that a confirmed intermediate-term high is in place, it will be important to monitor market behavior closely during the next several weeks for additional signs of a long-term top.

Latest comments

Loading next article…
Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.