Market Correction soon??

[David411]

It's gotta be coming, don't you think? I'm thinking of getting out of a few of my postions within the next week or 2.

[robvia]

Yes, I'm looking to sell positions too, but some are below where I bought them, so I'm waiting.

The data has been charted in the books
Victor Neiderhoffer - The Education of a Speculator
Harry S. Dent - The Great Bubble Boom 2006-2010

February is a bad month, so is September. The 07 year of any decade is also bad. So watch out in the 2nd half of this year. I'm going to sell all positions at the end of July and put everything in the Vanguard Prime Money Market (VMMXX) until November, including my Roth IRA. I'm not taking it thru a crash this time. From 2008-2010 will be a boom, then there will be a 2 year crash from 2010 to 2012, just like what happened 10 years ago.

[optimus25]

It's gotta be coming, don't you think? I'm thinking of getting out of a few of my postions within the next week or 2.

Market looking weak the past couple of trading sessions. With energy down I'm surprised this isn't causing some upside price bias.

[clavocat]

i called it early, got out, went on vacation, came back and seen china dipped, bought FXI and CHINA, lost on china and still holding fxi....also shorted yhoo, looking to buy QID if we go into a correction...problem is in May no one knew bot the correction and it just "happened" and now everyone is expecting it...so maybe it wont happen, too much talk about it but if it does correct everyone might pull out...another thing to take caution about is all the good/big guys are out of the market and will nibble all the way down prolly so it might be less of a correction..i dunno jus opinion i guess.

[Jack24]

Cash is king until we see a true correction of around 10% to 20%, which may revolve around a bull trap (double or triple bottom that lulls buyers in between bottoms).

It could take 5 to 9 months to unwind.

Emerging markets will decline 25%+.

This is all based on money flow. It's the one metric that doesn't lie.

Watch fixed income managers like Legg Mason, PIMPCO and Vanguard (bonds) bulge at the seams with money that comes from stocks being sold off in the coming months.

[englishman26]

JNJ doing well the last 2 days. A sign that money is switching into more defensive stocks??

I sold half of my positions yesterday. Others are already defensive or oil.

[metalheadrr3]

Stocks that are highlighted on the IBD 100 list have been crashing and burning lately ... down double digits mutliple days in a row, (GROW, INWK, EZPW ect ect) ... those are stocks that will lead the way up ... and lead the way down ... I might start cashing out myself

[englishman26]

AXR and LOGI are two of their picks which I was following (don't own) and they're doing okay today - a tough day, especially for tech.

Indeed LRCX has now been dropped from the IBD100. I guess they see t as a recommendation list, not a portfolio performance chart, so they can just do that! :roll:

[madcowdisease]

JNJ doing well the last 2 days. A sign that money is switching into more defensive stocks??

I sold half of my positions yesterday. Others are already defensive or oil.

Exactly. I've been buying like crazy in the oil patch. It can't go much lower; $5 maybe. Even if it is lower I'll cost average down but who cares, it's going up in the not too distant future.

All I own are consumer staples, high yield seculars, and oils. I'm not too woried about an impending correction. Not to say it won't happen just that I am positioned nicely.

[madcowdisease]

One may also want to consider economic data such as the following:

http://realestate.msn.com/buying/Article2.aspx?cp-documentid=2507006

In some corners of the inestment world they've ben calling for a correction for months based on the housing data. I understand the rationale of following housing, we tracked it all the time at university, but I am curious how you all feel about this data.

[aiki14]

One may also want to consider economic data such as the following:

http://realestate.msn.com/buying/Article2.aspx?cp-documentid=2507006

In some corners of the inestment world they've ben calling for a correction for months based on the housing data. I understand the rationale of following housing, we tracked it all the time at university, but I am curious how you all feel about this data.

Still seeing earnings running up, til some serious reductions I think the correction is still months away, if it comes. I bought into the correction theory after the may drop and again in nov, and it didn't occur. I need to see a catalyst for a correction that's different than we had then and have now before I drop cash into the mattress.

[concrete]

This is a great read.

http://www.sun-sentinel.com/business/sns-yourmoney-0114marksjarvis,0,4954772.story?coll=sfl-yourmoney

[optimus25]

This is a great read.

http://www.sun-sentinel.com/business/sns-yourmoney-0114marksjarvis,0,4954772.story?coll=sfl-yourmoney

Good stuff. The correllation between domestic market movement and international markets have moved closer as we move closer to a true global economy.

Its a scary thought because if the U.S. catches a cold, so do the international markets and maybe vice versa.

[madcowdisease]

This is a great read.

http://www.sun-sentinel.com/business/sns-yourmoney-0114marksjarvis,0,4954772.story?coll=sfl-yourmoney

I wonder if this article isn't a re-publication. A lot of the info that is mentioned within are the same concerns from last summer. The run-up in metals, borrowing from Japan's very cheap money supply, and over exposure to foreign markets. All of these concerns are what caused the market to slide in May '05. We've since seen the money that was invested in foreign markets and commodities flow in to the DJIA with records being set seemingly everyday.

This article gives me deja vu which makes me question its usefulness.

[MoMoney4Me]

JNJ doing well the last 2 days. A sign that money is switching into more defensive stocks??

I sold half of my positions yesterday. Others are already defensive or oil.

Playing defense in the current environment may be prudent.
I agree that it should pay to stay invested in equities rather than pull out and hold cash as long as the market has forward momentum, albeit a bit more slowly as we go into the year.

I know the majority on the forum are traders and do well seeking short term profits, but there are a few here that are a bit more conservative as I am and seek a decent return over time with less risk. And others of you that are traders and growing more apprehensive about the current market environment may be looking for a more defensive stance.

Here's a group of stocks I consider to be primarily defensive, that have a modest dividend yield, strong in their respective sectors, and should offer good near-term ( 3-12 months ) price performance with a minimum level of risk.

I advise that you do your own DD before taking a position in any of these selections, but this group should do well even in a market downturn.

ALL - Allstate Corp - Insurance (prop/cas)
AVY - Avery Dennison - Chemical (specialty)
CVX - Chevron Corp - Petroleum (integrated)
KO - Coca Cola - Beverage (soft drink)
CAG - ConAgra Foods - Food Processing
DD - Du Pont - Chemical
GSK - GlaxoSmithKline ADR - Drug
HNZ - Heinz - Food Processing
JNJ - Johnson & Johnson - Medical Supplies
KFT - Kraft Foods - Food Processing
RY - Royal Bank of Canada - Canadian Bank
SYY - Sysco Foods - Food Wholesalers
MMM - 3M Company - Chemical (diversified)
UPS - United Parcel Service - Air Transport
WFC - Wells Fargo - BankIf you want to look for more selections, near-term my current favorite industries are cable TV, metals and mining, air transports, securities brokerages, retail stores, and telecomm services.

I think we'll see moderating growth in GDP this year and slowing profit growth over what we've seen the past few years, but we should still move ahead at a respectable rate of 5%- 10%. The economy should continue to grow modestly, housing will stabilize, and global outlook remain about the same.

We still have the risk and uncertainties asociated with the global situation. A flare-up in the Middle East could quickly reverse the downtrend in oil prices and bear serious consequences on an already sluggish economy.

I hope this list will give you a starting point if you're looking for a more defensive portfolio. I truly think a pullback of 7%-10% in imminent later in the year. Its all part of the way the market moves though. These dips are usually followed by further moves to the upside after a short period of backfilling. Having a defensive portfolio and staying the course through the ups and downs has always been more profitable for me than trying to guess when they're coming and jumping in and out of the market.

Good luck and may profits always be on your side.

[Luc1Grunt]

Playing defense in the current environment may be prudent.
I agree that it should pay to stay invested in equities rather than pull out and hold cash as long as the market has forward momentum, albeit a bit more slowly as we go into the year.

I know the majority on the forum are traders and do well seeking short term profits, but there are a few here that are a bit more conservative as I am and seek a decent return over time with less risk. And others of you that are traders and growing more apprehensive about the current market environment may be looking for a more defensive stance.

Here's a group of stocks I consider to be primarily defensive, that have a modest dividend yield, strong in their respective sectors, and should offer good near-term ( 3-12 months ) price performance with a minimum level of risk.

I advise that you do your own DD before taking a position in any of these selections, but this group should do well even in a market downturn.

ALL - Allstate Corp - Insurance (prop/cas)
AVY - Avery Dennison - Chemical (specialty)
CVX - Chevron Corp - Petroleum (integrated)
KO - Coca Cola - Beverage (soft drink)
CAG - ConAgra Foods - Food Processing
DD - Du Pont - Chemical
GSK - GlaxoSmithKline ADR - Drug
HNZ - Heinz - Food Processing
JNJ - Johnson & Johnson - Medical Supplies
KFT - Kraft Foods - Food Processing
RY - Royal Bank of Canada - Canadian Bank
SYY - Sysco Foods - Food Wholesalers
MMM - 3M Company - Chemical (diversified)
UPS - United Parcel Service - Air Transport
WFC - Wells Fargo - BankIf you want to look for more selections, near-term my current favorite industries are cable TV, metals and mining, air transports, securities brokerages, retail stores, and telecomm services.

I think we'll see moderating growth in GDP this year and slowing profit growth over what we've seen the past few years, but we should still move ahead at a respectable rate of 5%- 10%. The economy should continue to grow modestly, housing will stabilize, and global outlook remain about the same.

We still have the risk and uncertainties asociated with the global situation. A flare-up in the Middle East could quickly reverse the downtrend in oil prices and bear serious consequences on an already sluggish economy.

I hope this list will give you a starting point if you're looking for a more defensive portfolio. I truly think a pullback of 7%-10% in imminent later in the year. Its all part of the way the market moves though. These dips are usually followed by further moves to the upside after a short period of backfilling. Having a defensive portfolio and staying the course through the ups and downs has always been more profitable for me than trying to guess when they're coming and jumping in and out of the market.

Good luck and may profits always be on your side.


Very good post IMO. Lot's of value out there despite the record highs in the big markets.

I think a couple additions are:

HAL
DOW
STA.

Good post and DD. :idea: