Following the August 7, 2015 Market Minute titled "Volatility", the current market pullback of the benchmark S&P 500 may seem severe, but it is still far less than the 2010 and 2011 corrections.

For example, in 2010, the equity index declined almost 18% while the "Fear index" jumped to 40.95.

In the following year, the event occurred again.

The S&P 500 dropped 21.2% and the VIX bolted up to 43.05.

Both times, after the brief corrections, the U.S. index moved on to a new high.

We feel that the present retracement is of a lesser degree than the 2010 and 2011 pullbacks as the VIX is still under 30.

Also, near-term futures contracts for the S&P 500 are suggesting only a moderate decline to start the Monday morning trading session.

Bottom line: The S&P 500 is in a corrective phase. The current VIX reading is similar to the pullbacks in 2012 and 2014 but less than the 2010 and 2011 retracements.

We believe that the current pullback in the market is a necessary movement and will not change the primary upward trend of the S&P 500.

The target remains at 2200.

By Donald W. Dony, FCSI, MFTA
www.technicalspeculator.com

COPYRIGHT © 2015 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present. He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms. He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

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