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Is a Deeper Correction Ahead?

by Deidre Salcido
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August 21, 2025 (Investorideas.com Newswire) The S&P 500
rebounded from a local low yesterday – does this suggest more
sideways trading ahead?


Stocks pulled back on Wednesday, but they rebounded from intraday
lows, with the S&P 500 index closing just 0.24% below Tuesday’s
close. Today, it is expected to open 0.4% lower, according to
futures contracts, and may trade sideways following recent weakness.
Markets are now waiting for the Jackson Hole symposium over the
weekend, amid concerns about potentially hawkish comments from Fed
Chair Powell.


The investor sentiment remains relatively weak, as reflected in
yesterday’s
AAII Investor Sentiment Survey, which reported that 30.8% of individual investors are bullish,
while 44.8% are bearish.


The S&P 500 has essentially pulled back toward its late-July levels,
as shown on the daily chart.



Nasdaq 100 Retested 23,000 Support


The Nasdaq 100 lost 0.58% on Wednesday after sharply rebounding from
a local low of 22,959.70. This suggests that selling pressure is not
strong enough to deepen the correction by much. Support remains
around 23,000, while resistance stands at 23,300-23,500.


Nasdaq 100 Technical Chart

VIX Bounced Before Coming Back Lower


Yesterday, the VIX (Volatility Index) rebounded to a local high of
17.19, but closed below 16, confirming investor uncertainty.


Recently, the decline in VIX reflected declining investor fear
(declining
gold prices
indicate the same thing).


Historically, a dropping VIX indicates less fear in the market, and
rising VIX accompanies stock market downturns. However, the lower
the VIX, the higher the probability of the market’s downward
reversal. Conversely, the higher the VIX, the higher the probability
of the market’s upward reversal.


VIX Market Fear Index Chart

S&P 500 Futures Contract: Back Below 6,400


This morning, the
S&P 500 futures contract
is trading below the 6,400 level, retracing yesterday’s intraday
rebound. Support is around 6,360, while resistance is at
6,420-6,430.


S&P 500 Futures Chart

Market Outlook: Sentiment Weakens


Thursday’s trading session is set to open lower, with the S&P
500 expected to start 0.4% below yesterday’s close. Investors remain
cautious ahead of the Jackson Hole symposium this weekend, as
hawkish comments from Fed officials could add to uncertainty.


  • The S&P 500 rebounded from intraday lows yesterday, but bulls
    are not out of the woods yet.

  • Markets are waiting for the Jackson Hole Symposium over weekend.

What This Means for Your Portfolio


For individual investors, this environment calls for careful
position management. While the market continues to advance, the
combination of low volatility, seasonal weakness signals, and
stretched valuations suggests that defensive positioning may become
increasingly important in the weeks ahead.


The current market conditions highlight the value of having a
systematic approach to investing rather than trying to time every
market move. Whether you’re using technical systems like the
Volatility Breakout System or
following seasonal patterns, having a disciplined framework becomes crucial during uncertain
times.


Thank you for reading my today’s free analysis. If you’d like to
read its premium version and then receive the premium follow-ups
(with ongoing updates on the Volatility Breakout System and other
trading ideas), I encourage you to subscribe to my Stock Trading
Alerts. There’s a free 7-day trial, so you can conveniently
test-drive before the regular renewal.

Sign up with the free 7-day trial today
.

Thank you.

Paul Rejczak
Stock Trading Strategist

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