Stock Market Correction: A Closely Watched Indicator Offers a Clear Picture of What's Next for Stocks

Over the long term, you'd struggle to find a better wealth creator than Wall Street. The annualized returns of housing, gold, oil, and bonds simply don't stack up to what Wall Street can bring to the table for investors over long periods.

But things get a lot dicier when attempting to predict directional moves in the broader market over shorter periods. Since this decade began, the widely followed Dow Jones Industrial Average (DJINDICES: ^DJI), broad-based S 500 (SNPINDEX: ^GSPC), and innovation-driven Nasdaq Composite (NASDAQINDEX: ^IXIC), have fluctuated between bull and bear markets.

Although all three major stock indexes were seemingly unstoppable during the first half of 2023, investor sentiment has shifted in a big way over the past three months. The S 500 and Nasdaq Composite are 10.3% and 11.9% below their year-to-date closing highs, as of Oct. 27, 2023, with the Dow down 9%. This means the broadest barometers of Wall Street's health are undergoing a correction.

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Source Fool.com