The S&P 500 (SPX) has suffered its worst daily decline since August and its worst two day decline since May, suggesting a pullback has begun and volatility is now returning to the market, says Frank Cappelleri, Chief Market Technician at Instinet.
Cappelleri notes that the two day rate of decline for Monday and Tuesday (29 and 30 January) totaled -1.76% and marks a key trading low. As such, he says “the picture perfect January trading channel is now history” (see Chart) and that a new technical pattern should form. He is not ruling out another rally to all-time-highs further down the line, but thinks a healthy breather could well be in order.
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