Markets don’t move in straight lines. But after a 10% correction in the S&P 500, traders are looking for signs of whether we’ve finally found a floor — or if more downside is ahead.
Today, S&P futures (/ES) hit the 10% down from the year’s high again after first doing it yesterday — but importantly, they did NOT take out yesterday’s low.
That’s what we call a retest, and it could signal that we’re nearing the lows.
But we still need confirmation.
For this potential bottom to hold, ES needs to close above this morning’s high at 5,673 — which could open the door for it to push back toward the week’s open at 5,753.
If that happens, we might see a real relief rally.
What’s Behind This Market Slide?
If this correction has felt relentless, that’s because it has been:
Since hitting its all-time high on February 19, the S&P 500 has tumbled 10% in just 16 trading days.
Meanwhile, Nasdaq futures (/NQ) have fallen nearly 12% from their December highs, and Dow futures (/YM) have dropped almost 6% since January.
The culprits?
- Tariffs reigniting market fears — New 10-15% tariffs on Chinese imports just took effect this week, and tech stocks are feeling the heat. The market knew this was coming, yet it’s only reacting now.
- The “Fort Knox Effect” on Gold — Since Trump and Musk’s visit to Fort Knox, big banks have been loading up on gold bullion, but gold futures have yet to reflect it.
- Rising volatility – The Cboe Volatility Index (VIX) has surged as much as 101% since the most recent low in mid-February and currently sits at over 40% in just the last two weeks. So it’s NOT just your imagination — traders are on edge.
Is This a Buying Opportunity — or a Dead-Cat Bounce?
Markets don’t bottom on a dime. A true reversal takes time, and just because we’re seeing a retest doesn’t guarantee we’re out of the woods yet.
For now, it’s all about key levels:
- A strong close above 5,673 on /ES would suggest bulls are stepping in.
- A move back toward 5,753 (this week’s open) would further strengthen the case for a rebound.
- But if we break below yesterday’s low, this selloff could have more room to run.
I’ll be watching the tape closely today to see if this morning’s bounce has real conviction, or if we’re just seeing another fake-out before the next leg lower.
UDATE: It wasn’t the bottom. Markets briefly hit a new bottom on Thursday, as I covered in Market Radar.
Stay sharp,
—Geof Smith
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