Feels Like a Correction is Coming

To me, it feels like a market correction is coming soon. Here are some of the factors that may lead to a correction:

Market has rallied significantly in the past seven months. The Dow, Nasdaq and S&P500 indices have advanced over 50%, close to or at 1 year highs, since the March 9, 2009 lows before pulling back last week. There have been no corrections (pullbacks of 10% or more) in that time.

Government stimulus ability is lessening. The Cash for Clunkers program is over. The first time home buyer credit will finish at the end of November.

Unemployment continues to be high. The economic recovery has been slow and new jobs are not being created. As unemployment rises, more foreclosures occur which then slows the housing recovery.

Superstition. Historically, September and October seem to have more big market corrections than other months. Also, I just recently turned cautiously bullish and put some funds in stocks last week, which probably means a top has occurred :-)

I've been wrong before about a correction, since I first expected one in May, 2009. There still seems to be a large amount of cash on the sidelines waiting for a pull back before being invested in stocks. Perhaps, the reinvestment of these funds is preventing the market from declining significantly, preventing a correction from happening, which allows the market to continue advancing, for now.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC