The Long Awaited 10% Correction Just Happened; Cramer: No Bottom Until Ebola Contained
financialsense.com
The long awaited 10% correction that everyone was looking for finally took place.
The S&P 500, Dow, and Nasdaq all hit record highs on September 19th before steadily falling to their most recent lows on Wednesday, October 15th. In total, the S&P 500 fell 9.8%, the Dow 8.6%, and the Nasdaq by 10.7%. From its high on September 2nd, the Russell 2000 has fallen 11.9% before bottoming yesterday as well.
Whether stocks indeed bottomed on Wednesday remains to be seen; however, stocks have corrected on average by over 10% when looking at the top four major indexes.
Looking outside the major averages, most stocks have fallen more than 20% and are now in a bear market. With stock market breadth this narrow, the major indexes could continue to get dragged down further.
One of the most watched breadth measures, the NYSE advance-decline line, which measures the number of stocks rising vs. the number declining, has been falling since it hit a high early September. It will be important to see whether it’ll rebound from current levels or continue to fall, signaling a continued deterioration in market breadth.
Craig Johnson from Piper Jaffray will be our technician on this Saturday’s show. His year-end target for the S&P 500 is 2100, which is close to 13% higher from current levels (as of Thursday’s close).
Even with the recent 10% correction, they are still sticking to their 2100 price target and believe that the market is going to experience a rebound rally into November and December.
Apparently, Jim Cramer disagrees and thinks the bottom won't come in until Ebola and ISIS are contained, among many other things:
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