Market Direction and Stock Trends

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Weekend Analysis by Amateur-Investor.Net
By: Amateur-Investor | July 14, 2018

Overall investors didn't panic back earlier in the year when the S&P 500 fell around 12%. Since the 2009 low each significant pullback in the S&P 500 has been accompanied by a decent drop in overall bullishness. Notice the % difference between Bullish and Bearish sentiment in previous corrections (points A to B) fell to -8% or lower (points C). These previous events were eventually followed by a higher high in the S&P 500. Meanwhile with the most recent correction, earlier in the year, notice the % difference between Bullish and Bearish sentiment didn't drop below the 20% level (point D). Thus investors certainly didn't push the panic button like they did with previous events. This may explain why most of the major averages (except for the tech heavy indices) haven't rallied strongly from their lows made earlier in the year.

In the near term the S&P 500 has rallied back to the 2800 level which coincides with its previous high in March (point E) and the 78.6% Retracement Level.

Furthermore, since the late June low, the S&P 500 has exhibited a small 5 Wave pattern to the upside which is likely nearing completion. Thus I expect a minor correction will probably develop next week.

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