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You Are â??Correctâ?? Sir

Youâ??ll definitely want to play the waiting game a bit longer to see if a full-blown correction takes place.

Remember last month when the chatter on Wall Street was dominated by the perma-bulls telling everyone what a great year 2014 was going to be? I certainly remember this talk, but so far in 2014 the bulls have been anything but present. Last week, stocks in the S&P 500 Index suffering their worst weekly performance since June 2012, sinking nearly 2.7%. That selling has ramped up in Wednesday trade. As of midday, the S&P 500 is trading below the 1,775 mark.

My reading of the chart below tells me that if we fail to get some bullish traction here at this level, then the next step could be a correction all the way down to 1,704, which is the 200-day moving average. If that situation happens, there will be a lot of investors running scared, and that could lead to an even bigger, more massive bout of selling.

SPX_012914

Now, I am not saying this scenario definitely is going to occur with stocks. What I am saying is that I think the breaking down of support at current levels is the beginning of a much-needed correction, and that itâ??s something to keep a very close watch on here if you are invested in stocks.

If you arenâ??t currently invested, then now is not the time to make your move. Youâ??ll definitely want to play the waiting game a bit longer to see if a full-blown correction takes place. If it does, that is when youâ??ll want to start putting on your bargain-buying hat and think about doing some shopping.

Read more about ramifications of a possible stock market correction at Eagle Daily Investor.

Written By

Doug Fabian is the editor of Successful Investing and High Monthly Income, and is the host of the syndicated radio show, "Doug Fabian's Wealth Strategies." Taking over the reigns from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbertâ??s Investment Digest. For more than 30 years, Successful Investing (formerly the Telephone Switch Newsletter) has produced double-digit annual gains. Doug has become known for his expert knowledge and timely use of innovative tools like Exchange Traded Funds, bear funds and Enhanced Index funds to profit in any market climate.

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You Are ‘Correct’ Sir

Remember last month when the chatter on Wall Street was dominated by the perma-bulls telling everyone what a great year 2014 was going to be? I certainly remember this talk, but so far in 2014 the bulls have been anything but present. Last week, stocks in the S&P 500 Index suffering their worst weekly performance since June 2012, sinking nearly 2.7%. That selling has ramped up in Wednesday trade. As of midday, the S&P 500 is trading below the 1,775 mark.

My reading of the chart below tells me that if we fail to get some bullish traction here at this level, then the next step could be a correction all the way down to 1,704, which is the 200-day moving average. If that situation happens, there will be a lot of investors running scared, and that could lead to an even bigger, more massive bout of selling.

Now, I am not saying this scenario definitely is going to occur with stocks. What I am saying is that I think the breaking down of support at current levels is the beginning of a much-needed correction, and that it’s something to keep a very close watch on here if you are invested in stocks.

If you aren’t currently invested, then now is not the time to make your move. You’ll definitely want to play the waiting game a bit longer to see if a full-blown correction takes place. If it does, that is when you’ll want to start putting on your bargain-buying hat and think about doing some shopping.

Read more about ramifications of a possible stock market correction at Eagle Daily Investor.

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