It’s time for a market correction.
That’s what we began to understand a few days ago.
We were looking at the potential impact of the Zeus retrograde station.
It clearly suggested that we were about to see a definitive trading top.
And as a top became more clearly expressed in the trading action this week, we began to see the bigger picture.
A market correction is on the way.
Defining A Market Correction
So what’s a market correction?
In a general sense, it’s a major price pull-back from a market that’s been in an extended rally.
Prices head lower.
But the question is, how much lower?
Loosely speaking a market correction is a move to the downside that’s big enough to get your attention.
It’s big enough to make you feel pretty uncomfortable, especially if you’re holding long positions in the market, and are hoping that higher prices are ahead instead.
But according to some respected market technicians, a market correction should be much more precisely defined.
To qualify, a sell-off in the market has to bring a move to the downside of at least 10 percent, measuring from its most recent peak.
Under the current circumstances, that “most recent peak” was the all-time record high for the S&P 500, at 3337.77, which was set intraday on Wednesday, January 22.
That means that a real market correction now would be a drop of 333.78, for an ultimate price target of 3003.99.
Is A Correction On The Way?
A drop of 333.78 points is a pretty big move, whether or not a Zeus retrograde station is involved.
But even so, it’s entirely possible.
In fact, during the trading action on Friday the S&P 500 gave up 44 points during the course of the trading day, and then closed at 3295.47, off more than 30 points for the session.
That big plunge took place just after I had joined Larry Pesavento for conversation about the potential for a correction in equities.
We got together on his Trade What You See program on TFNN.
During our chat we discussed this astro-cycle chart that I had featured on page 1 of a recent Financial Cycles Weekly newsletter.
It highlights the potential power of transneptunian stations in setting up a potential correction between now and the middle of February, with a likely rebound after that.
And as is usually the case, Larry seemed particularly intrigued by the influence of the transneptunians. He shared a great story about encountering them with Bill Meridian and Alphee Lavoie in Singapore.
Our conversation was brief; you can hear it all in this video from Larry’s show: