Market Insider

Odds favor a 10%-20% correction: Strategist

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Stocks could be setting up for a 10 percent to 20 percent correction, and the odds are good that it will be soon, according to Sam Stovall, chief equity strategist at S&P/Capital IQ.

Stovall has been expecting a 10 to 20 percent correction this year, but he says it's more likely to begin during the second quarter, based on historic market patterns. The S&P 500 was down 4 percent from its April 4 high in Tuesday trading.

"We've gone 30 months without a decline of 10 percent or more. The average is 18 months. It's just a matter of time," he said.

Stovall also says historically, corrections are likely to occur during midterm election years, when the declines have averaged 19 percent in the S&P 500. He also expects the year to end positively, and points to the average 10 percent returns in years after gains of 20 percent or more in the .