Major stock indices are selling off this week in what could be the start of a choppy period of trading.
Technical strategists and analysts do not expect a sharp sell-off for now and say 4,000 on the S&P 500 could be the stopping point.
Stocks are now in a choppy period, and technical analysts say it has the look of a short-term pullback.
Strategists say it would make sense for this week’s selling to fit in the pattern of many pullbacks with a 3% to 5% decline.
But corporate earnings season could decide the fate of the sell-off, which took the S&P 500 to Tuesday’s close of 4,134, a decline of 1.2% from record highs on Friday.“This is the quick move lower to relieve the overbought nature of the market,” said Scott Redler, chief strategic officer with T3Live.com. He follows the market’s short-term technicals. “A normal pullback can see 3,983 to 4,000 and still be healthy.”
Redler said the 50-day moving average at 3,985 has been an intermediate support level since November, and the S&P 500 has not traded below it for more than a session or so since.
