GO
Loading...

Market Mavens Say Correction Is Ending

Friday, 14 Jun 2013 | 10:52 AM ET
John Moore | Getty Images

It was the market move that everyone seemed to be expecting: the correction that the S&P 500 has suffered over the past month.

After being presaged for months by technicians, portfolio managers and traders alike, the market's uptrend finally broke on May 22. On that day, the S&P rose above 1685 to a record high, before reversing on concerns that the Federal Reserve would soon roll back quantitative easing.

Within two weeks, the S&P dropped to 1598 before recovering. So were those 5 percentage points the entirety of the correction that so many were fretting over for so long?

"We've had a correction that, peak to trough, was very shallow," Leuthold CIO Doug Ramsey said on Thursday's installment of CNBC's "Futures Now." "But what's been encouraging is just the fear I've seen on many of the sentiment data points that I track, all of which have taken some heavy damage considering how shallow this pullback has been."

Billion Dollar Warning
Billion-dollar portfolio manager Doug Ramsey says the correction may be over, but he explains why he's watching the market very cautiously. With CNBC's Jackie DeAngelis and the Futures Now traders.

People became bearish quickly, which Ramsey treats as a contrary indicator showing that the market now has room to run higher again. "We're pretty close to the correction, if we haven't seen the end of it," said Ramsey, who manages some $2 billion in assets with the Leuthold Group and is long S&P 500 futures.

Ramsey is in agreement with "The Godfather of Charting" on this point. Ralph Acampora, senior managing director of Altaira Ltd., said he would need to see both the Dow Industrials and Dow Utilities indexes better their May highs in order for the market to technically exit correction mode. But that didn't prevent him from observing that the market looked to have bottomed already.

"May I be very honest? I thought we were going to have a deeper correction," Acampora said on Tuesday's "Futures Now." "I thought this could have been the 5 to 10 percent correction, which honestly, I would welcome."

But the market's recent moves made him think otherwise.

End of the Correction?
Ralph Acampora, the "Godfather of Technical Analysis," explains why the market's recent moves could mean the correction is ending. With CNBC's Amanda Drury and the Futures Now Traders.

"I was very impressed on [the previous] Friday when we had the second-biggest update this year," Acampora said. And after opening much lower on Tuesday, "the market stabilized. So yeah, I think it could be the end of the correction."

On the other hand, Oppenheimer Chief Market Technician Carter Worth sees more downside ahead.

In a recent note, Worth wrote that the "selloff in the market has not served its purpose, has not provided the comprehensive rest that the overall market needs."

Worth points out that from 1927 to present, the median S&P correction has taken the market down 12.2 percent, while the mean drop has amounted to 8.3 percent. "The midpoint of the mean and the median is a decline of 10.25 percent," Worth told CNBC.com, "which from the May 22nd high of 1689.18 would mean S&P 1515."

So will the market rise from here, or is the S&P due for a 7 percent decline? That is the question investors everywhere must answer for themselves.

— By CNBC's Alex Rosenberg. Follow him on Twitter: @CNBCAlex.

Watch "Futures Now" Tuesdays & Thursdays 1 p.m. ET exclusively on FuturesNow.CNBC.com!

Like us on Facebook! Facebook.com/CNBCFuturesNow.

Follow us on Twitter! @CNBCFuturesNow.

  Price   Change %Change
S&P 500
---

Contact Futures Now

  • Showtimes

    Watch Futures Now Tuesdays & Thursdays 1p ET exclusively on cnbc.com!

Sponsor Links

  • CME Group brings buyers and sellers together through its CME Globex electronic trading platform and trading facilities in New York and Chicago.

  • Take your trading to the next level with a platform that lets you trade stocks, options, futures and forex all in one place with no platform or data with no trade minimums. Open an account with TD Ameritrade and get up to $600 cash.