A correction in the U.S. stock market is now overdue. But what actions should investors take if any in anticipation of such a pullback? For the long-term investor, the answer is very little, at least at first, as they will likely be better served to initially stand their ground with positions if not snap up a position or two on any short-term pullback. This is due to the fact that stocks enjoy an extensive netting of technical support at current levels. Stocks have repeatedly bounced off of key technical levels such as the upward sloping 20-day, 50-day, 100-day and 150-day moving averages throughout the latest market rally that began at the start of 2013. And until the S&P 500 Index begins to sustainably break these important technical levels and begins to test the still upward sloping 200-day moving average over the period of a few months, stocks are likely to maintain their short-term resilience. Moreover, bullishness among stock investors remains sufficiently strong at this point that even if we were to see a sustained correction, buyers would likely emerge to purchase the dips and reverse the downward trend at least on the first or second correction. Such is the nature of market topping processes and how bull markets end, and it will be key to monitor how the market behaves once some of these key technical levels are breached to determine whether a bull market top has finally been established or if the uptrend is poised to continue further.
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It's always a good idea to keep some good articles, at least I think they are good for reference, so I can go back and read them later.
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