{"id":3612,"date":"2014-01-14T08:03:27","date_gmt":"2014-01-14T13:03:27","guid":{"rendered":"http:\/\/www.morpheustrading.com\/blog\/?p=3612"},"modified":"2022-04-06T15:05:04","modified_gmt":"2022-04-06T19:05:04","slug":"no-worry-market-pullback","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/no-worry-market-pullback\/","title":{"rendered":"Why You Should Not Worry About A Stock Market Pullback"},"content":{"rendered":"
\"Don't
Alfred E. Neuman isn’t worried<\/figcaption><\/figure>\n

Stocks fell hard yesterday (January 13), igniting the usual fears that it’s time to sprint for the exit doors and sell all your stocks.<\/p>\n

But just wait! Grab a seat, close your eyes, take a deep breath,<\/strong> and let’s objectively assess the situation on a technical level.<\/p>\n

Although the NASDAQ and S&P 500 tumbled 1.5% and 1.3% respectively, you must ignore fear-mongering of the financial media and keep the January 13 sell-off in perspective.<\/strong><\/p>\n

If you are new to stock trading, you must know that bull markets do not trend in a straight line<\/em> (the same is true of bear markets).<\/p>\n

Rather, even the strongest uptrending market undergoes the occasional pullback along the way. Then, after stocks catch their breath for a month or two, buyers return to the scene and once again drive the market to new highs.<\/p>\n

This cycle of a rally, pullback (or consolidation), then rally again is what forms the “higher highs” and “higher lows” of any healthy market uptrend.<\/p>\n

Furthermore, the longer a market rallies without<\/em> a pullback, the more severe the eventual correction off the highs will be. As such, it’s better to have a correction now, <\/em>rather than after stocks have entered into a parabolic moonshot.<\/p>\n

I\u00a0personally welcomed yesterday’s pullback<\/strong>\u00a0because it is likely the start of a healthy, short-term correction that is necessary in order for stocks to take a break before eventually marching higher again. But in the meantime, you may be wondering…<\/p>\n

Where will the main stock market indexes find support?<\/h1>\n

Because of the intensity of the January 13 sell-off, it is unlikely that stocks will immediately snap back. Rather, short-term bearish momentum is likely to keep the bulls in check<\/strong> for at least<\/em> the next several weeks (one to two months more likely).<\/p>\n

To help give you an idea of where the S&P 500, NASDAQ, and other indexes may find their next levels of price support, I have annotated the daily charts of several popular, broad-based ETFs.\u00a0While looking at the charts below, keep in mind:<\/span><\/p>\n