Market Correction at Hand? Says Market Timer Frank Kollar

May 15, 2009 (FinancialWire) (By Frank Kollar)

Last week the S&P 500 Index (SPX) touched its January 2009 rally highs and immediately reversed to the downside. This may have been the start of a correction that has further to go on the downside. Note that the S&P Deposit Receipts (NYSE: SPY) can be traded as a proxy for the SPX.

The stock market advance that began in early march has moved higher virtually unscathed by any profit-taking. While this is good news for those wishing to recover some of the steep losses incurred in the bear market, it is unlikely that the markets will continue higher without pause.

Last week’s reversal from the January rally highs started the first bout of profit-taking that lasted more than two days. The odds favor a continued decline until investors cannot resist the lower prices.

Likely this will occur around the 50-day moving average for the SPX, currently at about SPX 832 (for the SPY it is at about $85.46). Should this level be broken on the downside, the SPX could decline to SPX 800 (for the SPY it is at about $80.00).

Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.

Kollar’s research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.

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