InvestorsPoll.com - Market Correction Or Market Crash?
Market Correction Or Market Crash?
By Cash Flow
April 10, 2012 - 11:23 PM EDT
Alright, another day and another big huge loss this week in the stock market. DOW has dropped 130 points on Monday and another 213 points today. It is well under the 13K mark right now. The question is begged, is this a correction or a crash? It's very difficult to tell, but I think you have to make your basis on pure fundamentals and the fundamentals are telling me that we are most likely in the midst of a deep correction. I don't think we're in a crash quite yet. Yes, we have almost wiped out all of this year's gains in just a matter of 1 and a half weeks. That's why it pays to be short sometimes. The moves to the downside tend to be much quicker than moves to the upside. What takes years to develop only takes months to destroy. It took a few months for the DOW to move from the mid-12000s to almost 13,300 points and it only took 7 trading days to damn near wipe it all out. The S&P has broken a key technical of 1370 and if it breaks the next one at 1350, we're in for some major trouble folks. I don't want to say that we are crashing, but the moves to the downside are going to be rather swift right now. I've believed for a long time that the market is way overvalued at these levels, contrary to what some of the analysts on CNBC say that we are actually undervalued. I don't believe we are undervalued for one second. We had almost reached the highs of 2007 - 2008, yet the economy is no where near as strong as it was then, neither are the jobs numbers, unemployment numbers, quarterly earnings, etc. Basically, what we have today is an early 2008 stock market and oil and gas prices mixed with a late-2009 economy.
The gas prices are near $4 in the Midwest, but the unemployment numbers are much higher than they were in 2008. Let's face it, this market has a lot more downside potential than upside. The European Debt Crisis is reemerging and now it looks like Spain and Italy are having the same problems once again as Greece, except they're actually big economies. The Fed has basically said no more bailouts and no more QE. Let's see how long they stick with that plan. If there's no QE and no bailouts, the economy will have to go down before it can get back up. QE and bailouts have only temporarily subsided the situations, never solved it, eventually, you have to let the thing fall, you just want to do it more slowly, but this will not happen slowly. I think a major implosion of the markets is still to come, but I'm not so sure it's going to happen right now, but it most definitely could and once again, I urge everyone reading this to hedge themselves or take profits now while they still can.
The key support level I am looking at right now is DOW 12K. If DOW 12K is broken, I may start to call this a crash, if DOW 11K gets broken, I KNOW THIS IS A CRASH. As of now, I will say that this just a major correction that was well over due. The markets rallied for 3 months and naturally, the markets do need to go through a correction before they can go higher, and it's healthy for the markets to do just that. So right now, I say, it's best to sit on the sidelines and let this thing play out and wait for a possible DOW 12K before I would even consider getting back in this game. The Bears are back and no one saw it coming. The 1st Quarter had everyone euphoric and greedy, well, if you came in late to the game, you're just going to be the loser in a game of musical chairs. Have a good one.
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