Will We Have A 7% Or Greater Correction By August?

C'mon, it's only my 2nd poll.

 

ask asia.

 

We will have a 10% correction when the S&P strikes 1700. Not before. Mark this post.

 

7% is too much

wont happen by august

 

On what do you base such absolute claims?

 

10% moves have been arbed out. The computers will only allow 2% moves to the downside.


So, no.

 

I clicked yes before I really thought about how much 7% was. Regardless, I think we're due for a significant correction.

 

It would only be a 990 point pullback on the Dow, 105 on the S&P, and 182 on the Naz.

 

The SP fell 3.5 percent on february 27. So much for "arbed out".

 

Think about it.

A price makes its way up a long staircase and then suddenly retraces about 50% or more of its move up. Then it makes a rounded bottom. Then it comes from its rounded bottom to make a new high over the old one forming what looks like a deep round cup.

The price goes over the rim, whats my price target?

Well, when it goes over the rim, then it has a few options. If there is not enough volume, then it will pull back and retrace about 50% of that cups height before coming back and breaking through the top.

However, if it does break through the top then the price target is the depth of that cup added to the rim.

1500+700= 2200 target price S&P500, roughly.

Now you have a cup over the summer of 2006 too. We have just gone over that cup.

1461-1219= 242

242+1461= 1703

1703 equals possible turning point

242 is the height of the last cup

242/2= 121= 50% retracement= 7.1% correction, 1703-121= 1582=potential correction point

or

242/3*2= 161 1703-161= 1542, 1542= potential correction point assuming 2/3rds retracement, 10.4% correction

I expect a 7-10% correction in the 3/4th quarter of the year followed by a rally into the new year.

1700 is the point where I believe it will happen.

There will be a few catalysts if you think about it fundamentally. The Shanghai stock market is starting to mirror the 1999-2000 Nasdaq 100. Actually, we can superimpose both charts on each other and the similiarities are striking. If this relationship holds up, then we will start to see a turning point around the 5000-6000 price area for the Shanghai.

Part of the reason why there is so much development in China is because of the Olympics. When the Olympics is about 6 months from the start, then the market will start to sell on the news.

When the Shanghai turns lower, then we shall turn lower as well. However, the move lower will be temporary. Thats when the Fed will probably aggressively cut rates.

All the stock prices look expensive when compared to last year, but trust me, they are not. A 50 dollar stock will go to 100. A 100 dollar stock will go to 150. The prices for shares will be higher, but the price action will be the same.

Its the cheaper stocks that you will have to look out for. It will be a buy higher and sell higher market. The higher the price for a stock the higher the demand for it.