S&P 500 Teeters on Brink of Correction as Technicals Break Down

The rout in US stocks has brought the S&P 500 Index to a crucial inflection point. It’s teetering near a correction after breaching 4,200 for the first time since May — a key technical level that may point to a longer-term selloff.

If the selling continues and the benchmark gauge for American equities stays below that psychological threshold, there are few levels to lure dip buyers, according to technical analysts, who monitor daily averages and other metrics to determine stock-market momentum.

The S&P briefly breached 4,130 during intraday trading Thursday before bouncing back above. The index would need to close below that level to mark its first official correction in over a year.

S&P 500 Flirts With Correction

Technical levels are important because for all the hand-wringing over technology company valuations, geopolitical turmoil and the surge in interest rates, at some point technicals and positioning take over the near-term stock-market price action. For chart watchers, now is one of those times, with the S&P 500 down seven of the past eight sessions despite a relatively strong earnings season.