After last week’s bounce in Netflix (NFLX) above the $1,000 level, the S&P 500 (SPX) started this week with a massive thud — reigniting the debate over whether the correction has more downside to go.
Spoiler alert: It probably does.
We’re still sitting below a key high and low that continue to act as major resistance. As long as SPX — which fell another 2.4% Monday — remains stuck under those levels, the pressure is downward. And the longer we chop below them, the more likely it is that we’ll push even lower.
The 4,800 Level Could Be in Play
If this market rolls over again, a test of 4,800 is on the table (we closed at 5,158 Monday). We’ve got what looks like a clean three-wave pattern setting up — a first push down, a bounce, and now a potential final leg lower to complete the move.
That’s the zone I’m watching for a potential bounce, but I’m not betting on it just yet.
The correction we’re in right now has nothing to do with tariffs. It’s about an overheated market that ran too far, too fast. And if you believe in the longer-term historical cycles — the ones that have repeated like clockwork since the 1800s — we’re heading into a window where major corrections tend to show up.
Not saying that’s guaranteed, but it’s worth keeping in the back of your mind.
What Would Flip the Script?
The two zones that matter most right now are the recent swing high and low. If SPX can break above both, the pressure flips. But until then, I’m treating this as a correction that hasn’t bottomed yet.
Earnings season could be the wildcard. We’ve got Tesla (TSLA) on deck, then Alphabet (GOOGL), Meta (META), Microsoft (MSFT) and others not far behind. A string of strong numbers from Big Tech could help break the pattern — but if earnings disappoint, this pullback could go from orderly to ugly in a hurry.
For now, stay tactical. Watch those key SPX levels. And don’t chase anything until the trend proves it’s ready to reverse.
Jeffry Turnmire
Jeffry Turnmire Trading
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