The Daily Market Forecast... contrary is good

Friday’s Blog Results: The suggested short stopped out for a 4.25-point loss (per contract). The long didn’t trigger.

Quick Tip: Contrary is good.

The Wall Street definition of a correction in the market is a 10% drop from the high. All indexes but the Dow did that last week. A possible short-covering rally late in the week repaired the situation.

What’s next is anyone’s guess but looking at evidence from past performance can be useful. Here are some interesting S&P statistics that may help you with your long-term portfolio plans (day traders don’t care about this).

In the past 33 corrections the S&P went on to Bear territory 7 times. The other 79% of the time it reversed to new highs.

The average correction was -15%. We hit that last week. The average Bear market was -36%.

Moving over to the Dow, in the past 29 events of global crisis (think wars, terrorism, Covid, Ukraine), the average drop was 11.6%. After 3 months it was up 11.3%, 6 months up 15.8%, 12 months up 24.7%.

Today’s Best S&P Futures Turning Points:

Short Level: Sell 4363.50 stop 4369.25.  

Long Level: Buy 4181.25 stop 4175.50.

Trade well,

Mike Siewruk

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