SPDR S&P 500 ETF

First up is a look at the broad market. The SPDR S&P 500 ETF ( SPY) is an exchange-traded fund that tracks the performance of the S&P 500, our favorite proxy for Mr. Market. With the recent drop in the S&P (around 2.2% in the last two weeks), many investors are wondering if this is just the beginning of a bigger downside move. My short answer is no.

There's a lot of evidence that points to this recent drop in the S&P being a minor correction rather than a change in trend. While the selloff of the last couple of weeks feels a lot more potent than 2% and change, the fact is that, as far as corrections go, this one is pretty tepid. Looking at the zoomed in chart of SPY above, it's clear that this pullback isn't coming anywhere near trendline support for the index, and momentum shows this stock coming back to RSI support for a minor correction, not a major one. The fact that we're on our sixth down day in the last seven feels like a change in trend, but the magnitude just isn't there.

Instead, the SPY is testing support right around the $140 level. If support can hold up there, it looks likely that we'll see more buyers come out of hiding next week.

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