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Erik McCurdy
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Erik is the senior market technician for Prometheus Market Insight and has been performing chart analysis since 1995. The software program that he developed to monitor long-term stock market trends has correctly identified 92% of the cyclical turning points in the S&P 500 index since 1940.... More
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  • Stock Market Overbought Correction Develops As Expected 0 comments
    Feb 25, 2013 9:11 PM | about stocks: SPY, DIA, QQQ

    The S&P 500 index reversed early gains to close sharply lower today, retreating further from recent highs of the cyclical bull market from 2009. The index has declined nearly 3 percent during the last four sessions, retracing the gains of the previous 20 sessions. This is the type of violent overbought correction that we have been expecting and it is likely that price behavior will return to support at the lower boundary of the short-term uptrend from November currently near 1,470.

     

     

    (click to enlarge)

    With respect to cycle analysis, the beta phase decline continues to develop as expected following the cycle high signal on February 20.

     

     

    (click to enlarge)

    Although the decline from last week has been predictably violent, it is important to note that the current cycle from late December continues to exhibit a very bullish translation. Therefore, it will be important to monitor the development of this beta phase decline closely for the next assessment of uptrend health.

    We will identify the key developments as they occur in our daily market forecasts and signal notifications available to subscribers. Try our service for free.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: Market Outlook Stocks: SPY, DIA, QQQ
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