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Although U.S. stocks have added more than $1.6 trillion in value, historical analysis does not rule out another decline. Since 1950, the S&P 500 fell below its low on the selloff day within the following three months in 11 of 17 cases when it rebounded by at least 2% within three days of a 4% drop. Net positioning by hedge funds and institutions has fallen to its lowest level in nearly five years, while retail investors have poured money into leveraged funds, including a record $9 billion in October inflows to SOXL. The index is above its 200-day moving average of 7,353.73. Mike Wilson believes the correction is nearing its end, while Dan Niles warns that temporary rallies can occur even during downtrends.
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