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How Concerning Is The S&P 500’s Pullback?

A Normal Pullback?

It is normal and to be expected for bullish trends to experience pullbacks or retracements. Typically, a healthy trend will see counter-trend moves that remain above the three major Fibonacci retracement levels shown below. As of April 17, the S&P 500 ETF’s (SPY) post-election rally remains in the “normal pullback” zone.

Is The Bigger Picture Showing Some Bearish Cracks?

This week’s stock market video reviews the impact of the recent pullback on the longer-term outlook. The video also covers the emotional impact of portfolio draw-downs.

After you click play, use the button in the lower-right corner of the video player to view in full-screen mode. Hit Esc to exit full-screen mode.

Video

Video

 

A Bearish Reference Point

The chart below shows the S&P 500’s 100, 200, and 300-day moving averages during the stock market’s topping process in late 2007/early 2008.

The same moving averages as of April 17 are shown below. Our concerns would increase if the chart below started to morph into a look similar to the chart above.

This article was written by Chris Ciovacco of Ciovacco Capital. It originally appeared here and was reprinted by permission.

 

About Chris Ciovacco

Chris Ciovacco has been serving investors for over 17 years. He is a regular contributor to Financial Sense, Seeking Alpha, and Safehaven. Mr. Ciovacco has been quoted in several media outlets, including the Dow Jones Wire Service, MarketWatch, Fox Business News, the Atlanta-Journal Consitution, and Nasdaq.com. Chris Ciovacco began his investment career with Morgan Stanley in Atlanta in 1994. With a focus on global macro investing, Chris uses both fundamental and technical analysis to assist in managing risk while looking for growth opportunities around the globe in all asset classes.

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