Related Link: Investors Look for Signs the Correction Is Over
"I am concerned by the dollar's decline and the shift of foreign investors into non-dollar reserve currencies and assets. Until the dollar stabilizes, the stock market will be volatile due to funds flowing into safer investments." -- C.R., CA
"What we have got here is the perfect storm ready to communicate. Its just a matter of days when the winds of this season will unveil. This week the big brokers are reporting and the likes of GS et al bless them for not missing is pretty much baked in like a 5:2 horse. And so will go the merry market with it this week with the carry trade having become downgraded to a tropical depression at the moment notwithstanding the likes of a certain sub-prime lender being put on the media ropes. (Let's hope they don't hit the mats before the brokers announce as are they not the major warehouses with one reported to have a least down a huge re-financing). So now looking forward with bond traders already being handed a lot of their lunches last Friday on the NFP bets notwithstanding the Government saves the number with its services hires. Cinderella numbers they called it. One of the lowest numbers since the early bulls days started or the last bear ended but did the wise not sell into the rally early Friday. The market breadth and volume not even close to any bull run means, but yes, volatility is back. So you got volatility, inverted yields, carry-trade susceptible, poor market breadth and run rates what's missing to raise the winds of change ... geo-politics comes to mind and all is not well in the Middle East. Tis that season again over there and all does not look well (Syria and Lebanon arming up against Israel, EU High Foreign minister to visit Damascus this week). It's looking cloudy out there, PUT up your umbrellas I think its getting ready to rain stocks and junk bonds." -- Glenn S., Great Falls MT
"I think we are due for a 2nd leg down in a normal, healthy 'correction.'
(1) The 'correction' is pretty shallow compared the the great run up of 2006
(2) The short-term correction Fib retracements on the index ETFs are between 38-50%
(3) The last 3 afternoons were sell offs from the morning gaps
(4) From an hourly chart, it looks like the indices are running into short-term resistance.
All this being said, I think after the 'correction' for the rest of the year, the markets will be decided higher.
(1) Strong world economies
(2) A lot of cash still waiting to enter the markets
(3) M&A and private equity action
(4) January was up (as January goes, so goes the year)
(5) It's a Pre-Presidential Election year, which usually has a bullish track record"
-- Mark G., IL
"The Dow should go back up to 12500-12600, then begin a 1000-2000 pt. pullback till the end of the year. This is just the beginning of a larger pullback over the next few years to 7000 or a lot less. This is just the beginning of real shock to all of the foolish market experts out there that think this so called "bull" market is going to continue. Their 'bull' market rally is truly a 'BEAR' market rally." -- Gary C., Quakertown Pa
"It has barely begun!" -- Dave T., FL
"You can analyze the market as much as you want. If investors made large amounts of money in 2006, they will have to report those earnings and have to pay the taxes by April 17th. Some will have to cash in to pay up. Once that date is past we should get a better picture and get back to a true meanings of what the indicators mean. This is not very scientific I realize. But it does add an aspect small investors must face." -- L. Jones, Kissimmee, FL
"Inflation is ticking up, durable orders are down; the housing sector is down. And there is speculation that the Fed may now lower interest rates at its next meeting. Investors, however, are still optimistic. This is precisely what makes me bearish: There is too much optimism. They think this bull market is going to last for a hundred years. We have had five years of rising equity prices. Whatever happened to boom and bust cycles, bull and bear markets, economic expansions and economic contractions? Has economic theory changed? It never ceases to amaze how when a bear market returns, investors, in general, fail to recognize them. Every talking head on CNBC appears to be biased toward the long side. They remind of the frog experiment: Drop a frog in hot water and they are quick to jump out to safety. Put a frog in water at room temperature and heat the water gradually and amazingly the frog will not jump out until the heat under their feet becomes unbearable. This is how I see investors today. They are in a pot of water that is gradually boiling under their feet but nobody is recognizing it." -- Gerardo B. Dallas, TX
"I don't think the "pullback" was a correction and yes, I think whatever it was, that it's over. Valuations are nothing like in the late 90's and last time I checked, people are still having babies and the elderly are living longer. The money has to be put to work, plain and simple." -- Brian V.P., TX
"This is more trouble in the future 3 weeks!" -- Darrell R.W., WI
"The stock market ‘correction’ is not ending. Just because we are seeing an increase in the Dow, the increase is not covering last week’s losses. This ‘correction’ may not be as black and white as we want it to seem. We saw the Dow hit record highs in 2006 and the beginning of 2007; maybe the drop will be an abiding trend, not just a short correction. In conclusion, I think the stock market is due for a correction and I think it will continue. My suggestion would be to invest in Asian mutual funds which have made a 40%-50% increase last year." -- Paul J.
"Sorry to say the market has more downside to come. It's not over yet." -- Linda K., NJ
"It seems that the correction was just a smack on the back of the head. Investors, for a short time, forgot that doing business is risky. Now that weak holders are out of the game we can start higher. Fundamentals are key in this market." -- Bob F., MA
"I don't feel this latest downturn was a correction. I believe our bull market will continue for another 1 1/2 to 2 years. Then we might see a correction. That's just my view based on over 45 years trading experience." -- Mike H.
"The market acted the same way in January 2006. This is only a minor correction and starting in April 2007 and through the year everything will be okay." -- Tom G., Seven Hills, Ohio
"I use a psychology approach. I believe the public is addicted to trading. Addicts need their fix. This market definitely needs more correction. The euphoria we get from taking risks propels the market. Short term we may see a bull run to recover from a fast correction. I think there is trouble ahead ! Time will tell." -- Greg A., MN
"We are in a long over due correction. The first should have been prior to the Santa rally, the second is due now. A 3-4 week correction of 10-15% is needed for a strong market at the end of the year." -- Rod., DE
"NO, the return of higher volatility is the sign that the markets can tip even further. one day does not a correction make. We need a good cleansing wash out in order to move higher. Right now there is still a ton of cash on the side lines. This cash seems to trickle in on any sell off looking for bargains. Than shorts also seem to cover causing these brief bounces. That needs to end before the next leg up can continue. I don't believe that we have seen the real weakness in the economy yet reflect in the numbers. who trusts those anymore. with revision and anomalies I prefer the anecdotal evidence that I hear and see every day. No fear and panic means more to go on the downside. Dow 11,300 will indicates a bottom to me." -- Anonymous
"The market will move up from here with some corrections along the way. The interest rate increases past few years have taken hold. Soft landing with GDP 1% to 2% first quarter, then it gets better for remaining 3 quarters. Nice return by October." -- Bob F., Alabama
"There is a sign of beginnings of confidence. This will build slowly and the Market may struggle during the build portion, but will resume. Then, when enough confidence is present, those more apprehensive will step in and we will resume what we all know, the fickleness of the market. According to those who are supposed to know, fundamentals are good, so for now, we are in the hands of emotion." -- Jim W., Minnesota
"Witching Week will be wild, and the market will be choppy for the next few months. The general trend will be down, with high volatility." -- Rich W., Indiana
"This 'correction' is a wave to be ridden, in that the American Spirit' is optimistic in nature. Americans, as true capitalist leaders, will make something happen versus watch from the sidelines. They are players. My mother, born and raised in New England, always said, 'Do something if it's wrong!' -- Sally B., Arkansas
"I think this coming week or next (of March 12th or of March 19th), there will be another pull back about 200-400 points." -- Bob F., CA
"This was a WAKEUP CALL ... people better start being careful or the 90's will be back! I feel it's a call to make everyone retreat and buy with brains not hopes." -- Bradley C., DuBois Pa
"The 'correction' is nothing more than a ripple in what is the wave matrix of the entire global economy. A lot of what is happening is still just fallout from the 9/11 disaster. It will be massively worse in the next few fiscal years. Buy Gold and Commodities." -- Russell H. CA
"The market kicked off a much larger correction than people believe possible. Even the question 'Is the stock market correction near an end or is there more to come?' suggests the editors believe it is a temporary situation. The masses will get hurt badly on this down." -- Bill G., Illinois
"We are looking at a few more weeks of 'sideways action' characterized by relatively minor rises, declines, and tempests in teapots. An overall decline of less than five percent from this level is possible but will prove temporary. When all is said and done around mid or late spring the climate will be sufficiently stabilized to begin enjoying some steady gains again. Those who buy healthy companies with solid fundamentals on dips in the meantime will dance the dance of joy by summer." -- Bill W., PA
"No. If this is a true correction then it would be the shortest on record. The situation could turn around on favorable earnings posted by the Dow 30 beginning next month. I'm not holding my breath until that happens. I believe there are more - and better - buying opportunities yet to come in Q3 & Q4." -- Larry S., Oregon
"Almost all investors are asking the wrong question and coming up with the wrong answer. The real issue isn't what will happen over the next few months, but rather, what will happen over the next few years. The stock market has been more near-term myopic recently than at any time in my 57-year lifetime. But that will change quickly, within weeks, as the market recognizes long-term realities. Here are the macro trends over the next five years for the U.S. stock market:
1. U.S. stock market no longer looks attractive relative to international markets.
2. Continued weakness of U.S. dollar.
3. U.S. has to pay long-term cost of Iraq war, including massive 50-year medical costs to care for 200,000 injured soldiers.
4. China and U.S. go from friends to enemies.
5. South America goes Socialist and Chavezists.
6. Democrats win Presidency and Congress big and impose taxes on the rich and big business, especially big oil.
7. U.S. pays massive cost for health care reform.
8. U.S. energy dependence peaks as oil goes above $100 per barrel.
9. Hedge funds blow up, taking markets down; American voters backlash against hedge funds.
10. Americans take back their own economy, jobs and manufacturing sector from foreigners. Protectionist voter sentiment and trade policies. True immigration reform focused on Mexico.
11. Near zero growth in U.S. housing and auto sectors for almost a decade.
12. U.S. economic growth slows dramatically as Baby Boomers retire early.
Today, March 9, 2007, the Russell 2000 index has a P/E ratio of about 40 based on current year earnings, which represent culmination of the most ideal 5-year earnings environment in U.S. history. Five years from now, the Russell 2000 will produce the same earnings that it does today. Zero earnings growth over the next 5 years, including 2 recessions lasting a total of 6-7 quarters. You may not see the Russell 2000 with a P/E ratio of 40 again in your lifetime. You will see it as low as 20 within the next 2 years. 50% near-term correction in the Russell 2000. In this market, five years passes in the blink of an eye. Protect yourself at all times." -- Rich., New York
"I think that this correction may be short-lived but I believe that overall, the market could use it. I like corrections because corrections create bargains and it's a good time to 'stock up.'" -- Mark M., Michigan
"Typically, these pullbacks last a few weeks or more. We are not yet finished. I think we will see a rally soon, then new lows into April and beyond. It is at that point that a call becomes much more difficult. The long secular trend is up, so multi-year investors have good to great opportunities even now. My advice for most is, if not now in cash, get there very soon. This situation could extend to a decline beyond most expectations." -- Brian F., VA