Stock Market Corrected 1/3rd and Now Very Oversold

In Monday's post, we gave some "normal" targets for the correction, with many historical corrections taking 1/3 to 1/2 of the prior gains away before finding a bottom.  Those targets would equate to levels of 1573 (1/3) and 1513 (1/2).

Abracadabra.  Almost sooner than the words left the page, we got a low of 1560 on the S&P 500 and it bounced.  The stock market has now been pushed into a deep oversold condition as shown in the next chart.

Of course, the correction can go deeper, but in a large percentage of times that you get the orange and the blue lines in the chart above both in oversold conditions, you get at the very least a short-term rally.

We'll just have to wait and see what the market has in store for us.

Don Hays

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