September Could Bring a Market Correction
Although I am not a pessimist, I do believe that a market correction is in order, and the events expected in September give argument a good starting point.
Even though we have had a good rally to an all-time high, stocks are still not overvalued at this point. For this reason I wouldn't think a pullback in the stock markets wouldn't be too drastic. I wouldn't be surprised to see them drop just over 7%, like last year.
One of the best arguments for a smaller correction would be the strength of the U.S. market compared to other markets around the world.
There aren't a lot of handsome alternatives out there right now. European and emerging markets don't look very appealing and with no real alternatives, the momentum for money going out of U.S. markets over an extended period does not look likely.Taking into account the two major obstacles that the markets face and the poor alternatives investors have to the U.S. equities market, I believe the argument for a autumn correction, starting the second half of September and into October is strong. Although I don't see the correction being extreme, I do think investors should take note of the challenges the market faces this month. At the time of publication, the author held no position in the ETF mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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