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Stocks: More Pain Is Possible

S&P says major indexes may test their recent lows, and advises caution

The major indexes appear to be tracing out continuation patterns rather than bullish reversal formations so it would not surprise us to see another move down to at least test the recent lows. There is also the possibility that the market is not finished punishing investors, and we see another leg to the downside. Either way, we continue to advise caution and would keep plenty of powder dry for what could be an excellent buying opportunity sometime in the second quarter.

During the early part of February, the major stock indexes fell back, with many retesting their late January lows. The price tests were successful, however, that certainly does not mean the market is out of danger as we still have a couple serious issues with the recent action.