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Saturday, June 01, 2013

Market Correction Likely Next Week

Based on the market action, I expect there will be a market decline next week. I expect it will be enough to provide the 5% correction that has been long awaited.  Here are the reasons:
  • Higher volatility.  Volatility is returning after staying low for all of 2013.
  • Fear of Fed tapering.  I realized a couple weeks ago that QE tapering is the greatest fear in the market.  Just the mention of slowing QE has caused the market to decline 2% a couple weeks ago.  With the economy slowly healing, QE tapering is becoming more likely sooner.
  • Good news is bad news.  Good economic news means QE tapering which means bad news for the stock market.  Next week will include two Fed speeches, two May job reports and the weekly unemployment new claims. 
    • I look forward to the buying opportunity the correction will create.

    For more on Reflections and Musings, check back every Saturday for a new segment.

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

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