Selling Will Likely Escalate If S&P 500 Loses This Support Level
At MarketVision 2026, I discussed the increasing likelihood of a stock market correction to begin in 2026.
Looking at the major indices at the time, it may not have seemed obvious. After all, the S&P 500 ended 2025 at 6845.50 after reaching an all-time high at 6945 just five days earlier. But a recent Yahoo! Finance survey showed that every analyst was pointing to a higher S&P 500 in 2026, which, by itself, should have scared every investor. We all ought to know by now that Wall Street is nothing more than a greedy bunch that often misleads the investing public for their own personal gain.
While Wall Street was touting the higher target prices for the S&P 500, they were quietly unloading growth stocks by the truckloads. Check out this large-cap growth vs. large-cap value ratio (IWF:IWD) for the past five years and how its bearish rotation helps to predict S&P 500 downturns.
This is just one piece of a massive jigsaw puzzle, but it's an important one. Wall Street is never going to tell us what they're thinking ahead of time. They do all their necessary rotation into safety, whilst telling us about the sunny days ahead! As I said on the chart, it's what I call "legalized thievery."
Volatility ($VIX) has trended up for three months now and is in a dangerous territory above 20. When volatility reaches this level or higher, I begin to anticipate periods of impulsive selling where market makers (part of the Wall Street Criminal Network) simply "go on vacation" and watch prices fall precipitously before accumulating at the bottom, while the rest of us are panicking and swearing to never buy another stock ever.
We can either continue to fall for these shenanigans or we can learn their tricks and do what they do — sell high and buy low.
A big closing price support level is approaching on the S&P 500 at 6538. If this support level fails, we might see what it looks like when market makers go on vacation, because I don't see a solid level of price support level beneath 6538 until we reach 6144, the price of the key June 2025 breakout above the prior all-time high in February 2025. Check this out.
Now is the time to prepare for what lies ahead, instead of reacting to it while extremely emotional.
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This is no joke. JP Morgan, one of those bullish analysts with significantly higher price targets for the S&P 500, lowered their forecast yesterday from 7500 to 7200. At EarningsBeats.com, we told our members how this would play out. The lowering of 2026 forecasts in the next step.
It's another form of Hunger Games, the kind where Wall Street is hungry for your money. It's sad but true.
Happy trading!
Tom
