Equities tried to bounce back on Thursday but investors shouldn?t read too much into the news. The S&P 500 gave up the gains in the final hour of trading and closed with a loss of 1.1%. The best the market can hope for now is for a sideways movement to begin as we enter the peak of the Q4 earnings cycle but we are not hopeful. While reports are coming in better than expected the outperformance has been marginal and reflects the two-edged sword of inflation: Inflation is boosting revenue is hurting profitability.

Next week will be a make-or-break moment for the S&P 500. If the index can maintain support above 4,500 the odds of a major correction will diminish greatly. As it is, the index is on track to put in at least a 5% correction and as much as a 6% correction before finding support. If the market falls below 4,500 however, a move down to the 4,300 level becomes very likely.