Over the past few months, the stock market has seen a few swings. This shouldnâ€™t come as a big surprise. Back in August of 2014, I wrote aÂ research note on the S&PÂ 500Â and the lack of a â€œtechnical correction.â€ In stock market lingo, a correction from current highs is generally considered to be -10%, while a pullback is generally less. At that time, the past 4 pullbacks averaged just over 4 percent.
Now that six months have passed, letâ€™s check in to see if we got that S&P 500 correction and where the stock market is likely headed.
In September-October of 2014, we did indeed get a pullback of -9.83% (perhaps close enough). December of 2014 saw a pullback of -5.14%. And the only pullback so far in 2015 was -5.38%.
And for even more context, consider this:Â the average of the past seven pullbacks is -4.72%.
Those type of pullbacks will likely continue. However, given the Federal Reserves reluctance to raise interest rates, itâ€™s my opinion the stock market still has more upside in 2015. And that could put off another S&P 500 correction for a little while.
S&P 500 Index – 10 year weekly chart
Thanks for reading,