Contrarian investors suspect that the stock market’s recent decline has run its course — for now.

That’s because these market timers, especially those who focus on the Nasdaq
charting-symbol=”INDEX/US/XNAS/NDX” class=”qt-chip positive” href=”https://www.marketwatch.com/investing/index/NDX?mod=MW_story_quote”>NDX,
+0.37%
market in particular, have become sufficiently bearish that the short-term path of least resistance has turned up. Still, it’s not clear that any new rally will have much lasting power. An even more serious U.S. market decline cannot be ruled out over the coming couple of months.

For now, the recent decline appears to have been quite modest by historical standards, smaller even than what satisfies the semi-official definition of a correction as a 10% decline. Before Thursday’s big rally, the Dow Jones Industrial Average
DJIA,
-0.77%

had fallen around 1,200 points from its previous all-time high, or 3.4%. The S&P 500
SPX,
-0.31%

was 4.0% below…

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