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Deeper Stock Sell-Off Ahead: Pro

Thursday, 20 Jun 2013 | 6:06 PM ET
Stock Charts Suggest Deeper Sell-Off: Pro
Thursday, 20 Jun 2013 | 5:29 PM ET
Technical analysis provides the case for the stock market to head 3 to 5 percent lower, Oppenheimer's Carter Worth says.

Technical analysis provides the case for the stock market to head 3 to 5 percent lower, Oppenheimer's Carter Worth said Thursday.

"Once you're down more than 5 percent, history shows you don't stop there," he said. "You typically go down quite a bit more."

Major stocks closed more than 2 percent in the worst trading day in 2013.

On CNBC's "Fast Money," Worth looked to historical perspective.

"Back to 1927 there have been 205 corrections of more 5-plus percent," he said, noting that the median decline was 18.3 percent and the mean was 12.2 percent.

"So, we're down now 6.2 percent, which is much shallower than both the median or the median," he added.

The total decline from the highs could be as much as 8 to 12 percent.

Worth also looked to the term "correction."

"It implies that something is incorrect, that we've gone too steep, too far, the runner's gone too fast. The weightlifter's lifted too much," he said.

"You've got to take breaks in life, rest. In order for this bull market to stay healthy, you want the correction. You don't want it just to stop after a couple of percent."

Trader disclosure: On June 20, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Jon Najarian is long UVXY; Jon Najarian is long BOT; Jon Najarian is short TOL; Jon Najarian is long SPF; Jon Najarian is long RYL; Jon Najarian is long EEM 25% left; Jon Najarian is long MGM; Dan Nathan is short XLU June 38/36 put spread; Dan Nathan is long XLF short July 19 puts; Dan Nathan is long MU July 13 puts; Dan Nathan is long TLT July 110/115/120 call fly; Dan Nathan is long FB June/July 25 call spread; Dan Nathan is long QCOM July/Oct. 65 call spread; Dan Nathan is long XLE June 80/77 put spread; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long MSFT; Guy Adami is long AGU; Guy Adami is long NUE; Guy Adami is long BTU; Guy Adami's wife, Linda Snow, works at Merck; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long C; Karen Finerman is long TGT; Karen Finerman is long GOOG; Karen Finerman is long M; Karen Finerman is long dis; Karen Finerman is long MDY, SPY, IWM, KFS puts.

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