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Weekend Reading: Just A Correction, Or Something Else

August 28, 2015

Weekend Reading: Just A Correction, Or Something Else

AAA-Weekend-Reading-List

Earlier this week I posted two pieces of analysis with respect to the recent dive in the markets. The first discussed the possibility that this is just a correction within an ongoing bull market. The second delved into the possibility that a new cyclical bear market has begun. Only time will tell which is truly the case.

However, in ALL cases, the initial decline led to a subsequent bounce and ultimately retested previous lows. As shown in the chart below, this was the case in 2010 and 2011 which were ultimately followed by Federal Reserve interventions that helped the bull market regain its footing.

SP500-2010-2011-Crash-082515

The question is whether, with economic growth rates slowing and deflationary pressures building, will the Fed again intervene by postponing rate hikes and injecting liquidity? Or, is this recent correction just the beginning of something larger? Only time will tell for certain. However, there is mounting evidence that we are indeed closer to the end of this bull market cycle than the beginning.

This weekend’s reading list is a smattering of views from bulls, to bears and everything in between as to the recent correction. Is it just a correction to be followed by a resumption of the bull market? Or something else?

THE LIST

1) Panic Attack Or Start Of A Bear Market by Ed Yardeni via Dr. Ed’s Blog

There have been lots of panic attacks since the start of the bull market in early 2009. The first four of them occurred from the second through the fourth years of the current bull market, and they were full-fledged corrections. They were all triggered by worries that a recession was imminent, with anxiety focused on three major and varying concerns: a double-dip in the US, a disintegration of the Eurozone, and a hard landing in China–all having the potential to cause a global recession either individually or in combination. When those fears dissipated, relief rallies ensued.”

Yardeni-SPX-082715

Read Also: Was Monday’s Plunge Capitulation, Nah! by Simon Constable via Forbes

 

 

…click on the above link to read the rest of the article…

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