Understanding Stock Market Corrections

Whether it is the change of the election situation, the decline of U.S. stocks in the past week or so has caused signs of a phased head at the weekly level. This means that although the medium and long-term trend has not changed, if it cannot quickly reach a new high, the summer market is likely to pass through adjustment.

Going back to the current market, it is necessary to realize that a weekly-level reversal combination has emerged. The S&P phagocytosis combination has appeared several times before, and most of them have fallen for 2-3 weeks or even more. The Nasdaq saw an obvious negative line decline after a high cross star. Looking at the combination of the two indexes, it means that the pressure on the technical form is relatively obvious.

Generally speaking, if the lost ground cannot be collected and paid quickly this week/next week, it means that a breakthrough will be made to step back. Considering that the financial reports will happen to be released intensively in the past two weeks, the market may play games around this topic.

For us, we can pay more attention to the final market result: the bullish reversal after a single-week reversal means that new room for growth is opened. Combined with the political factors mentioned at the opening, the Democratic Party may have to further push up asset prices. level, then we must avoid the risk of ourselves stepping short; On the contrary, if the rebound in the past two weeks is weak or continues to fall, then you must beware of longer and larger downward adjustments. Of course, the final accelerated rise will not be absent, but cheaper prices are always a good thing. In addition, relatively speaking, at the current price and time period, the probability of a platform-type sideways market in the U.S. stock index is unlikely, so you can also consider going long volatility to ignore the direction of ups and downs.

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