The thud you heard around the middle of the day on Friday was the sound of millions of investors' jaws hitting the floor at the same time. While there were more than a few people who certainly recognized the market was a little frothy, it's pretty safe to say the scope of the pullback over the past two days has sent a lot of surprised investors scurrying. The market's key indices have broken under key support levels too. Remember how I mentioned to you yesterday the S&P 500 only needed to break under its 50-day moving average line to officially move over to the bearish side of the fence? Yeah, well, that happened today. You know what though? As technically bearish as most charts turned on Friday, I have to play the role of the devil's advocate here (just because you're not getting this perspective anywhere else) and point out how the S&P 500 has quickly overcome this situation before... and not even that long ago. Oh, I'm still a short-term bear, but you deserve to know the whole story and not just the hysteria most financial news sources are giving you now. What You Need to Know Now Above all else, know that while the headlines look terrifying, this isn't the end of the world. It's not even the end of the bull market. It's just the end of a pretty good leg of the bull market, and a well-deserved break for stocks. News outlets make more money when they can make a huge deal out of a relatively minor event, and nothing draws a crowd faster than a combination of fear and curiosity. Point being, don't take everything you hear to heart. To the media, a mere 7% selloff is a financial apocalypse. To regular investors like you and me, a 7% correction is just part of the game. Second (and I have to give full credit to John Monroe over at the SmallCap Network Elite Opportunity, who's been the one to make this abundantly clear), topping out isn't an event, but rather a process. It took several days for stocks to get ready for their implosion on Thursday and Friday, and truth be told, we're probably not done with the top-out process yet. After nearly 3.0% worth of pullback over the course of two days, we're apt to see a dead-cat bounce early next week... at least a minor one. A couple of bullish days won't fully reverse the budding downtrend, however, so don't get lured back prematurely. Third - and as I mentioned above - as ugly as the past couple of days have been, the market has bounced out of this situation and back into a bullish trend before. In fact, it's happened three times within the past eight months. This "situation" is a move under the S&P 500's 50-day moving average line (purple). It's a technical confirmation that the intermediate-term trend is officially bearish. But, the S&P 500 didn't fall too far under the 50-day moving average line in June of last year before reversing course and moving to even higher highs. Ditto for August, and ditto for October (all highlighted in gray). In fact, the current pullback is still smaller than any of those mid-2013 pullbacks were, so it's not as if we've passed the point of no return. With all of that being said, I actually do think we're at the onset of normal, nothing-to-worry-about bull market correction because of something that is different this time around. This time around, the market is digesting a 63% advance since the late-2011 low without giving us a 10% correction at any point in time between then and now. Between the length of the rally AND the size of the rally, I just have a feeling we're due. For perspective, the bull market between March of 2003 and October of 2007 carried the market higher by 84% without a 10% correction at any point during that span. That's bigger than the current runup, but it also took four and a half years to make the advance. It's only been 27 months since the current unfettered 63% rally began. Even more concerning is how this bull market - since the bottom February of 2009 - has doled out a 150% gain with only two major corrections during that time...June of 2010, and the Q3-2011 pullback. Point being, we've just pushed our luck a little too long for my comfort. Now it's time to pay the toll. No biggie. Of course, any discussion of a pullback is incomplete without at least setting some tentative downside targets. To draw these lines in the sand though, I'm going to defer to the SmallCap Network Elite Opportunity's resident index guru, John Monroe. John was right on the money reading the broad market in 2013, and I don't see that changing now. Anyway, for reasons I can't get too deep into right now, he sees the 1772 and the 1724 levels as the big potential floors for the S&P 500. For reference, the S&P 500 closed at 1790 on Friday. Here's the thing... even a pullback to the 1724 level wouldn't be that bad. It would only be about a 6.7% dip from the recent peak around 1849, which wouldn't even put any selloff into the "average" category. I'm sure it would frighten the daylights out of most traders though, who have (frankly) become a little spoiled by a relentlessly bullish market. And, that's exactly the time to start scooping up your favorite long-term picks; I know we'll be pouring into some new positions then. It's a story we've seen all too often ... investors are most wrong when they're most sure they're right. You can buy into that fear if you want, but we'll be a going shopping when stocks are trading at that discount, because this is NOT the beginning of a bear market. It just feels like the beginning of the end because the media loves to tell really scary stories. By the way, I know we talk with you about the direction of the major market indices here in the newsletter, pretty much every day, but I'd be the first to admit it's usually a more theoretical and somewhat unspecific conversation. If you want some index-based analysis that's specific and more actionable, then you absolutely owe it to yourself to see how the SmallCap Network Elite Opportunity does it. In all seriousness, even if you never traded one of their individual stock picks, you could make a fortune just using John Monroe's index/market analysis. Don't believe it? Take the free two-week test drive to see for yourself. Here's how, or cut and paste this link: https://www.smallcapnetwork.com/pages/SCNEO/v1/