The S&P 500 (SPX) has dropped 6.28% over the past two sessions alone (Figure 1). This was the first 6% decline over a two-day period since the 6.13% drop in February 2018 (Figure 3) and the largest two-day decline since the 7% swoon in August 2015 (Figure 2). Following both of those prior occurrences, the market showed a spirited rebound in coming days/weeks ahead, but ultimately retested the initial lows. Our playbook reflects this scenario given the dramatic move in our two most sensitive indicators that suggests it is time for a reflex rally, like the initial move off those prior two market hits.

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