So
far volumes have been declining during this downturn. As long as that continues, the correction
should be relatively shallow. Optimistically,
we could test S&P 500 1257 and then move up. We are now 8% above the 200-day moving
average so a slightly more negative scenario has us falling another 8% from here
(down to 1210). If volumes pick up
during any further decline, all bets are off.
There
is always some chance that this is THE TOP and we'll see significant declines
from here. There are many non-technical
issues of concern such as: End of QE2; high gas prices; Budget Deficit and
inflation fears...domestic and foreign.
The problem with these issues is that we have no crystal ball and we
can’t know how the Market will interpret them.
The Market always climbs a “wall-of-worry”. When will the worry turn to panic? We can’t know.