Stocks are suffering a ‘time correction’: Technician

The standard definition of a stock market correction is a 10 percent drop from high to low—something the S&P 500 has not technically experienced since mid-2011. But according to one noted technical analyst, stocks are currently in the throes of what he terms a "time correction."

"Whoever said that the market has to have a correction in price? You can also have a correction in time, meaning the market can just go sideways," Craig Johnson of Piper Jaffray said Monday on CNBC's "Power Lunch."

To understand what the phrase "time correction" means, one first has to is understand that stocks tend to rise over time—with the S&P 500 returning an average of 10 percent a year in the long run. A longish period of time in which stocks return little to nothing, as they have done thus far this year, represents a kind of correction after a bull run.

A period of flatness "allows all the fundamentals to catch up with the price action you've been seeing in the market," Johnson said. "It's actually a healthy thing."

Read MoreTime to prepare for a market correction: Technician

Time clock
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Indeed, Johnson considers the current "time correction" to be a bullish driver for stocks.

"When you go back and you look through history, you will see that these time corrections have actually proved to be a positive for the market. It gives the market time to digest, build a foundation and a base to move higher from here—and that's exactly what we think will happen this year."

"We would agree with Craig—we think that strong leadership is going to revive the rally," added Andrew Burkly, head of portfolio strategy at Oppenheimer, also on "Power Lunch." "You want to be constructive until the year-end."


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Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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