The S&P 500 just broke a major trend line downward for the first time since the start of the pandemic, said Gareth Soloway, chief market strategist of InTheMoneyStocks.com.
In an interview with David Lin, anchor for Kitco News, Soloway discusses how much the broad market indices could correct, and the timeframe for this correction.
“The move from the pandemic panic lows has never been broken until today, and this is what I’m really watching and what I think could trigger as much as a 10% correction,” Soloway said. “Notice today’s action on the S&P 500, we’re trading below the [trendline].”
Soloway noted that this correction could take place over a month, and won’t be a “flash crash” type scenario.
Stocks reacted negatively to the U.S. Federal Reserve’s hawkish tone on Wednesday during which the Dot Plots, showing where each Fed member anticipates interest rates to be, revealed two potential rate hikes next year.
The reason stocks did not fall even more on the news is due to retail investor money still flowing in, Soloway noted.
“There’s a lot of money that wants to be in the market, and it’s not scared yet. Once you get scared money later on, that’s where the accelerations to the downside should come,” he said.
Reference: Kitco
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