Is This Market Heading For A Serious Correction?

You can’t move on Wall Street without hearing talk of a serious correction. And after Monday's 2% loss it seems the bears are starting to dominate this market.

Jittery investors are cashing out after new data raised concerns that the economy isn’t recovering at nearly the rate needed to support current valuations.

What's at the heart of the sell off? The health of the consumer, that's what. Investors may have bet too aggressively that the consumer is about to bounce back.

For your consideration:

On Monday, a weaker-than-expected outlook from Lowe’s highlighted the fragile state of the consumer. Also Bank of America said on Monday credit card defaults inched up in July, as more Americans lost jobs and many continued to struggle to pay their debts.

And that may be just the tip of the iceberg. Earlier in the month, disappointing retail sales and weak consumer sentiment data also suggested the consumer could be floundering.

That’s particularly ominous because in years gone by, consumers have shopped our economy right out of recession. If that's not going to happen and happen soon, then stocks are probably overbought right now -- way overbought.

Dan Deighan, founder of Deighan Financial Advisors, tells CNBC, “There’s no basic foundation for the run-up we’ve had, (it’s) been far too rapid." He predicts we're going to see a 25 to 50 percent drop in the market.

And he’s hardly alone in his outlook. Pimco's Mohamed El-Erian says much the same. In fact, CNBC’s Cindy Perman writes, “There has been a growing chorus of market pros who say the market got way ahead of itself.

You can certainly count perma-bear Peter Schiff, president and chief global strategist at Euro Pacific Capital among their ranks.

He tells Fast Money, “we’ve been in a bear market since 2000. It’s the rallies that are the correction. The primary direction is lower.”

And he goes on to say that all the debt the US has issued to save the banking system has put the market in a worse position that it was 6 months ago. “The market is over extended and there’s no reason for stocks to be rising,” Schiff adds.

Sounds pretty bleak. But that's not to say the bulls are down for the count.

On the Halftime Report Joe Terranova wasn't nearly so pessimistic. He said, "I expect the market to trade between 950 and 1010 for the next two weeks. Down the road, however, I expect stocks should move higher."

What do you think? We want to know!

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Trader disclosure: On Aug 17th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Najarian Owns (BAC); Najarian Owns (BBT) Call Spread; Najarian Owns (C) Calls; Najarian Owns (FCX), Is Short (FCX) Calls, Owns (FCX) Puts; Najarian Owns (HD) September And Is Short (HD) August Calls; Najarian Owns (HPQ) September Calls And Is Short (HPQ) August Calls; Najarian Owns (MS) And Is Short (MS) Calls; Najarian Owns (MSFT) And Is Short (MSFT) Calls; Najarian Owns (UNH) Calls; Najarian Owns (YHOO) Call Spread; Finerman's Firm Owns (BAC) Preferred Shares, Finerman Owns (BAC) Preferred Shares And Owns (BAC); Finerman's Firm Owns (MSFT), (TGT), (WMT), (CTX); Finerman's Firm Owns (WFC) Preferred Shares And Is Short (WFC), Finerman Owns (WFC) Preferred Shares; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (USO), (XRT); Finerman's Firm And Finerman Own (PDE); Seygem Asset Management Is Short (BIDU); Seymour Owns (AAPL); Seymour Owns (BAC); Seygem Asset Management Is Short (FXI)

For Jeff Tomasulo:
Tomasulo Is Short (IBM)
Tomasulo Owns (JPM)

For Pip Coburn:
Coburn's Fund Owns (AAPL), (ANSS), (ADBE), (SY)
Coburn's Fund Is Short (PALM)