S&P 500 Market Correction May Subside: Technical Analysis

The slump in the Standard & Poor’s 500 Index (SPX) may be nearing an end after the measure dropped below its 150-day average, which may lure buyers into the market, according to Oppenheimer & Co.

The benchmark gauge slipped 8.7 percent between April 2 and May 18, falling below its average price from the prior 150 days on May 17 for the first time since Dec. 19, according to data compiled by Bloomberg.

Oppenheimer’s Carter Worth wrote in a May 21 report that declines to the 150-day average may prompt pessimists to stop selling and persuade investors who missed out on the market’s rally through April to buy.

The S&P 500 is “down to a level where rebound potential is high and that the right thing to do now is to put some money to work on the long side,” Worth, the New York-based chief market technician at Oppenheimer, wrote in the May 21 report. The stock index rose 1.8 percent this week through yesterday.

Worth highlighted 90 stocks to buy that are down to levels where “selling pressure is judged likely to abate.” The list included Berkshire Hathaway Inc. (BRK/B), Intel Corp. (INTC), Microsoft Corp. (MSFT) and Starbucks Corp. (SBUX)

“If and as these names stop going down (read: stabilize) and actually start to rebound, one can make inferences about the current market correction being at an end,” Worth wrote in the report.

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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May 24 (Bloomberg) -- Bloomberg's Deborah Kostroun reports on the performance of the U.S. equity market today. U.S. stocks erased losses as Italian Prime Minister Mario Monti said Greece is likely to stay in the euro and a majority of the region’s leaders support issuing a joint bond, offsetting earlier concern about a Chinese slowdown. (Source: Bloomberg)