A couple weeks ago, the market made headlines as the Dow and S&P 500 broke to new all-time highs before falling steadily lower on fears that the Federal Reserve may begin to taper stimulus measures as early as next week.
Many are asking, “Is this the beginning of a major top or just another correction in an ongoing bull market?” Legendary market technician Stan Weinstein recently told Financial Sense Newshour that the big picture “is still long-term bullish,” but that it’s clear we’re in the latter stages.
When asked when this correction might end, Lowry’s Senior Market Strategist, Richard Dickson, said to look for “intense selling.” If you look back at the corrections so far this year, he says, just about every one has ended with what he calls a “90% down day,” where 90% percent of stocks close lower and 90% of the volume is to the downside.
Echoing remarks made by Stan, Richard also doesn’t think we’re in the beginning stages of a major correction or bear market.
“Something we are watching very closely is if you start to see that sort of selectivity indicated by…people starting to migrate more towards the supposed safety of the big-cap blue-chip stocks. But again, we haven’t seen that. So, as far as we’re concerned, the breadth of the market is still very very good.”
“There’s obviously the potential for a more short-term correction but we see virtually a nil possibility that that correction could develop into any kind of major decline. That still seems to be months away.”
References:
Technician Richard Dickson: No Alarming Trends in Buying or Selling Gauges (available Saturday, 12/14)
