The S&P 500 has undergone a sharp correction, and the video examines whether the move marks a break in the bull market or a routine pullback. It focuses on technical analysis, including key price levels, support zones, Fibonacci retracements and market sentiment, to frame the decline as either a correction or the start of a larger downswing. The approach is presented as fact-led, avoiding headline-driven conclusions.
The video references market experience as context, citing 44 years in the markets as a basis for the method described. It also states that Carol Harmer has more than 39 years’ experience analysing and trading global markets, positioning her as a long-standing technical trader. No further market data or performance figures are provided beyond these tenure statistics.
Market Reaction and Technical Levels
We are viewing the recent market dip as a healthy correction, not the beginning of a major downturn. The S&P 500’s pullback to the 5,850 level, triggered by the May CPI coming in at 3.4%, is a reaction to shifting interest rate expectations. This is a moment to focus on the data rather than the fearful headlines.
Volatility has increased, with the VIX index jumping from 14 to over 21 in the past two weeks. This makes buying options more expensive, so we should be cautious with outright long puts or calls. Instead, consider strategies that benefit from this elevated premium, such as selling covered calls against existing long positions.
From a technical standpoint, the market is finding support near its 100-day moving average around the 5,750 mark. This level has held firmly, suggesting that institutional buyers are stepping in on the weakness. We see this as a classic test of support within an ongoing uptrend, similar to the pullback seen in the spring of 2024.
Sentiment, Strategies, and Historical Context
Market sentiment reflects caution but not outright panic, which is constructive for a potential rebound. The most recent American Association of Individual Investors survey shows bearish sentiment jumping to 40%, but this is far from the 50%+ levels seen during true bear market bottoms. This indicates there is still cash on the sidelines waiting to be deployed.
In the coming weeks, we should look to sell cash-secured puts on high-quality tech names that have been unfairly punished. For those looking to play a bounce with defined risk, bull call spreads on major indices like the SPX or NDX offer an attractive way to participate. This approach allows us to capitalize on a potential recovery while managing the high cost of options.
Historically, corrections of 5-8% are common in bull markets and often serve to reset valuations before the next leg up. The market experienced three such pullbacks during the 2017 bull run, all of which proved to be excellent buying opportunities. We believe the current setup is no different, providing a chance to reposition for strength into the second half of the year.
