Intermediate Correction

Current position for Active portion of portfolio: SELL – S.T.A.Y. Plus™

The market has developed at least an Intermediate term correction.  We define corrections in the following categories;  a Minor correction is a 1% – 5% pullback, Intermediate 6% - 10%, Major 10% - 15% and Primary a 15% - 20%.  Any correction greater than 20% is defined as a Bear Market correction.
 A long-term bull market can have multiple minor, intermediate, major and even primary corrections over a period of many months and years.  Although this current correction has been significant as the S&P500 has had over a 6 1/2% correction from its high in mid-July to it’s low of last week, we would term it as an intermediate correction so far.  This correction could turn out to be like the correction that happened earlier in April of this year.  However, there is some hint that a much larger correction could be developing based on the 161% Fibonacci level seen in the monthly chart.  On the monthly chart, you can see that the market turned downward right at the 161% Fibonacci level, which according to Elliot Wave theory, could indicate that this turn was the beginning a more significant correction such as a major or primary correction, or even the top before the beginning of a bear market.    Only time will tell.  We will continue to monitor this correction that has had a series of at least two lower highs and two lower lows confirming a definite downtrend.  However, if this trend changes, we will be quick to change our equites position from an inverse position to one that is in line with a bullish upward direction of the market.

​Weekly S&P 500 Chart (with all-time hi shown)

​Monthly S&P 500 Chart (with all-time hi shown)