S&P Enters Correction

Hey guys, the S&P entered a correction the moment it broke down from the nose of the Diamond and the pinch between the MA’s 50 and 200. But here’s Reuters by way of Fidelity to clue us in that S&P entered a correction today.

Wall Street tumbles again as S&P enters correction (complete with classic stock photo of stressed out trader).

 

Sad trader from Reuters/Fidelity

“NEW YORK (Reuters) – U.S. stocks ended more than 3 percent lower on Monday, their fifth straight drop, in an unusually volatile session that confirmed the S&P 500 was formally in a correction.”

I don’t know about you guys, but I’ll take the informal kind of correction and prepare accordingly. It started when SPX dropped out of the red dot for the 2nd time and was confirmed when 2050, a whopping 157 points ago, was lost.

Here is what actually happened.  SPX chose ‘down’ from its moving average decision point. This had been the most likely direction given momentum, leadership and participation that had been fading long before hand, although it also seemed pretty obvious. I mean, you and I both saw it, right? SPX then broke support #1, turning intoresistance #2.  SPX then broke support #2, turning into resistance #1.

 

And now here we are.  The bull market is intact and the test is at hand.  What the market has going for it is Mr. Frumpy Trader up there, and a lot of bear market calls coming out.

So everybody’s got the bear memo, the Margin man has probably made a good amount of his collections and nothing is resolved.  Not unless the market loses the October lows.