Head fake: Probably the last chance to sell before more downside

Today’s stock market bounce is likely the last chance investors will have to sell, if they haven’t already, before we see stocks make new lows.  My short-term target for the S&P 500 is around 1,700.  Today’s close will be very interesting – if we close higher, and if decent earnings and economic data support it, we could see further upside next week as the market tries to shake-off all of the negative technical damage done; if we fade into the close again, as we have seen happen several times over the past week or so when stocks have tried to bounce, next week could see further downside, possibly to at least the 1,700 level for the S&P 500.  It would be better to see the correction run its course quickly so that stocks  can stabilize, form a bottom, and begin to rally again.  The more drawn-out the correction, the more chance for a major break-down and an overshoot to the downside well beyond 1,700.


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