Market Analysts Predict Stock Correction in Early 2025
Financial experts are forecasting a significant stock market correction for early 2025, with the S&P 500 potentially facing a decline of nearly 10%. Fairlead Strategies, led by Katie Stockton, has identified several technical indicators suggesting an impending downturn in the market.
According to Stockton, the S&P 500 has recently displayed new intermediate-term “sell” signals, which were confirmed last week. Key technical indicators supporting this outlook include the MACD, daily stochastics, and the DeMARK Indicator. The conclusion of the Santa Claus trading window further reinforces the likelihood of a continued decline.
Long-term indicators are also pointing towards a correction in the first quarter, followed by an extended period of sideways trading. The DeMARK Indicators, in particular, show signs of long-term upside exhaustion for the S&P 500. Notably, similar long-term “sell” signals in 2018 and 2022 preceded corrective market environments, lending credence to the current forecast.
Analysts have identified potential support levels for the S&P 500, including its 200-day moving average of approximately 5,555. A further drop to about 5,337 could represent a total decline of 9% from current levels. It’s worth noting that the S&P 500 is already down 4% from its record high set in early December.
In light of these projections, Stockton advises investors to use relief rallies as opportunities to implement top-down hedges. She recommends holding stocks in strong uptrends above support levels defined by a rising 20-day moving average. Additionally, the use of stop-losses is suggested to mitigate the potential impact of a broad sell-off.
As the market navigates through this anticipated correction, investors are encouraged to stay vigilant and adjust their strategies accordingly. The alignment of intermediate- and long-term “sell” signals indicates that this could be a significant market event, warranting careful consideration and proactive portfolio management.
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