Why the S&P 500 Could Drop Substantially

To get a feel of how healthy the stock market really is, I like to look at the S&P 500. The S&P 500 is an index comprised of 500 of the largest and most liquid companies. Investors should be aware of the underlying trends for the S&P 500, as a portion of a stock’s move will be based on the underlying direction for the broader market. The S&P 500 has certainly pulled back in the latest earnings season, but I think there’s more to go. This isn’t surprising, considering the large amount of uncertainty in the world. The U.S. has just had a presidential election, and the fiscal cliff issue is ongoing. China is still unable to regain its previous growth rate levels, and the problems in Europe are certainly not new to readers of Profit Confidential. When looking at the S&P 500, I like studying the technical analysis of the situation in trying to determine the risk-rewa...