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This might be the most brutal 10% correction in history. But the good news is that stocks should bottom shortly.

From a purely gain/ loss perspective, the overall indices are only down 10%. However, “under the hood” the damage to the stock market has been severe. The MAG 7 stock, which account for 30% of the S&P 500’s weight, are down ~20%.

As awful as this correction feels, in many ways this was to be expected. We are in the 3rd year of this bull market begun in 2022. Historically, the 3rd year is the most challenging one for bull markets. And with the S&P 500 having recorded truly incredible gains of ~20% in both 2023 and 2024, stocks were due for some increased volatility at least in the first half of 2025.

Put simply, this current period for stocks, while painful, is to be expected. It is not unusual, nor should we panic. And by the look of things, the lows are in or about to be in.

The Tech ETF (XLK) is at MAJOR support. It would be EXTRAORDINARY for it to take out this line right here and now.

Moreover, the ratio between growth and value stocks has fallen to test its 40-Week Simple Moving Average (the same as the 200-Day Simple Moving Average). This has historically marked THE lows for market pullbacks during this bull market begun in late 2022.

In the simplest of terms, ALL of the froth has been taken out of the markets. And with the inflation data, GDP and labor market cooling, the door is open to the Fed starting to ease monetary policy again.

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