New Downside S&P 500 Target is 1045-1035

Editor's Note:

The S&P 500 has fallen through support at the 1,085 level. Now what?

Last week I suggested readers watch for the correction to reach the 1050-1035 zone. I still believe that's a good target to shoot for. Not only is 1035 close to a 10% correction in the S&P 500 but the 1045 area is the 38.2% Fibonacci retracement of the S&P's rally off the July 2009 lows.

Trying to pick a bottom is always dangerous so don't try. Be patient and let the market come to you. Better yet wait for a bounce once it looks like stocks have bottomed. You don't have to buy the absolutely bottom to be successful.

On a short-term basis I believe stocks are oversold and will probably see a rebound soon. Unfortunately the bounce will be an short-term entry point for bearish positions. This correction could take another two or three weeks.

Keep your eyes on the Watch List for new trades. Last week we had two stocks graduate from the watch list to the play list.