However, Stovall noted that relief rallies have also occurred during drawn-out market declines. Currently, the S&P 500 has been testing its 200-day supporting levels and a 10% decline threshold, but the markets tend to slip further after the relief rally has run its course.
“So while some indicators are hinting that the coast may be clear, others indicate that choppy market action may be with us for a while longer,” Stovall said in the note. “Therefore, we can only say for now that the market is undergoing a counter-trend rally that should take the S&P 500 to the 1350-1360 resistance area.”
SPDR S&P 500
For more information on the broad market, visit our S&P 500 category.
Max Chen contributed to this article.