Chart: S&P 500 Could Fall 11% on Inflation Scare
1st Rally: The S&P 500 rallied 20.16% from October 2022 to February 2023, and subsequently retraced to the 50% Fibonacci level.
2nd Rally: The S&P 500 rallied 20.96% from March 2022 to July 2023, and subsequently retraced to the 61.8% Fibonacci level.
3rd Rally: We may have seen the peak of the 3rd rally when the S&P 500 rallied 23% from October 2023 to February 2024. If history repeats itself, we may see the S&P 500 retracing to the 50% or 61.8% Fibonacci level, at 4,576 or 4,464 respectively.
There may be a short-term correction of up to 11% based on technical analysis. Fundamentally, renewed concerns about inflation and delays in rate cuts may have put an end to the market rally. Additionally, the S&P 500 tends to experience a sell-off in February to March based on election year seasonality.
We continue to hold a long-term bullish outlook on the S&P 500, supported by positive earnings forecasts and optimism surrounding artificial intelligence (AI). Our preferred strategy is to gradually accumulate S&P 500 ETFs (such as $SPDR S&P 500 ETF Trust(SPY)$ , $Vanguard S&P 500 ETF(VOO)$ , $iShares Core S&P 500 ETF(IVV)$ ) at 4,576 and 4,464 in the event of a dip in the S&P 500.
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