An Orderly Correction (thus far)

An Orderly Correction (thus far)

October 03, 2023

The reputation of the historically volatile timeframe of August, September and early October has not disappointed in 2023.

With the VIX market volatility indicator having increased over 50% since mid-September, it’s time to take a step back and get some context on where the US stock market is, as expressed by the S&P 500 index.

Chart 1 – a “normal” -8.4% correction (as of publishing this note intraday on October 2nd) similar to two previous corrections since the October, 2022 low:

Chart details: a minor “head & shoulders” pattern has resolved into covering a small “gap up” from June 2nd.

SOURCE: TC2000

Remaining gaps on this chart lie at 4083, 4031 and 3979.

Chart 2 - A nearly perfect visit to the bottom of the current bullish trend channel:

SOURCE: TC2000

Chart 3 – The 200-day Moving Average within 1%:

SOURCE: TC2000

Chart 4 – Less than 1% from an important Fibonacci level (the 23.6 retracement) of the move from the March 2020 Covid low to the January 2022 high.

SOURCE: TC2000

We know that the “why” behind macro asset movement often devolves into a paralysis-by-analysis condition that prevents action.  October 2022 is a prime example.  The “what” in the S&P 500 index speaks to an orderly correction that may be nearing completion for an intermediate rally into year-end.

As always, please touch base should you want to discuss further.

All the best,

Sean

´╗┐Disclosures:

This material is provided as a courtesy and for educational purposes only.  The future performance of an investment or strategy cannot be deduced from past performance.

Standard & Poor’s 500(S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  Indexes are unmanaged and do not incur management fees, costs, or expenses.  It is not possible to invest directly in an index.