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Will the market head lower?

Will the market head lower?

May 17, 2022
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The stock market had another down week, continuing an almost steady slide since the end of March. In the midst of last week’s downtrend the S&P 500 flirted with bear market territory on Thursday.

The question everyone is asking now is: will the market continue to head lower? No one knows a specific answer to that question. However, we can look for guidance in how the stock market has behaved historically and remember the market only goes in one direction, whether up or down, for so long before it reverses direction. Currently the market has been on an overall downward trend for 6 weeks, it has reached a support level at 20% below its highs, and investor sentiment is negative. These are all indicators that in the short-term the market may reverse and head higher.

In the coming weeks we should know if the S&P 500 is truly in a bear market and the economy in a mild recession, or if this is just a market correction (10%-20% drop without a recession).

Photograph by: Stephen Leonardi on Unsplash

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