Serious Stock Market Correction On The Way?

(CNBC)You can’t move on Wall Street without hearing talk of a serious correction. And after Monday's 2% loss it seems the bears are starting to dominate this market.

Jittery investors are cashing out after new data raised concerns that the economy isn’t recovering at nearly the rate needed to support current valuations.

For your consideration:

On Monday, a weaker-than-expected outlook from Lowe’s [LOW 20.18 -0.29 (-1.42%) ] highlighted the fragile state of the consumer. Also Bank of America [BAC 17.009 0.449 (+2.71%) ] said on Monday credit card defaults inched up in July, as more Americans lost jobs and many continued to struggle to pay their debts.

And that may be just the tip of the iceberg. Earlier in the month, disappointing retail sales and weak consumer sentiment data also suggested the consumer could be floundering.

That’s particularly ominous because in years gone by, consumers have shopped our economy right out of recession. If that's not going to happen and happen soon, then stocks are probably overbought right now -- way overbought.

Dan Deighan, founder of Deighan Financial Advisors, tells CNBC, “There’s no basic foundation for the run-up we’ve had, (it’s) been far too rapid." He predicts we're going to see a 25 to 50 percent drop in the market.

And he’s hardly alone in his outlook. Pimco's Mohamed El-Erian says much the same. In fact, CNBC’s Cindy Perman writes, “There has been a growing chorus of market pros who say the market got way ahead of itself.

You can certainly count perma-bear Peter Schiff, president and chief global strategist at Euro Pacific Capital among their ranks.

He tells Fast Money, “we’ve been in a bear market since 2000. It’s the rallies that are the correction. The primary direction is lower.”

What do you think? We want to know!


Was Monday finally the start of a 10% correction for the market?

Yes, get out

No, resilient tape


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Was Monday finally the start of a 10% correction for the market? * 2462 responses

Yes, get out
65%

No, resilient tape
35%
Not a Scientific Survey. Results may not total 100% due to rounding.



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