Correction Begins

Below are the main readings from the model. When the market is strong the top blue line will be above 40 and the bottom red line will be below -20. On September 20, 2010 the red line crossed above its threshhold, shortly after the blue line crossed below its threshhold. This indicated the market would experience a correction.

On October 18th the blue line reached a turning point and started to correct, signaling the market would also correct. On November 9th the S&P 500 Index started its correction falling about 3.5% before it resumed its upward climb. The market however will not be done correcting untill "indicator 2" the red line returns to its normal range. On December 7th the red line started to retreat and will return to its normal range. As this happens the market will also experience a correction.

In the above chart I have highlighted instances where "indicator 1 and 2" have rose and fell out of their normal ranges. As you can see as the indicators reach their maximum point and begin to normalize the S&P 500 undergoes a correction. As soon as the indicators reach their normal ranges the market resumes its trend.

Currently we are waiting for "indicator 2" to reach its normal range. Untill it reaches this range the market will likely fall. As soon as the model has any further developments I will post them.