Mary Ann Bartels, head technical analyst at Bank America Securities/Merrill Lynch, said the S&P may correct 15-20%. She's watching 5 "trip wires" to catalyze a market correction. 3 out of the 5 trip wires went negative. She sees this current rally as a "breadth thrust" like '75 and '82 when the market rallied over 60% and had a 14% correction. Since there is no uptick rule today she sees more volatility on the downside. The correction would be part of a "base building" process. She's also bullish on commodities and sees a possible head and shoulders bottom in gold. If it breaks out of the reverse H&S pattern $1,300 is in the cards. Watch the full BloombergTV video interview.
Negative: - China market correction
- Buy volume deteriorating, higher volume on sell offs; Negative breadth
- Investor Intelligence Survey: Pessimism at 2007 lows
- Percent of NYSE stocks above 200 day moving average at 91%, highest in 5 years
- Tech outperformance
What this correction would look like..
U.S. Stocks at Risk for 20 Percent Decline: Technical Analysis (Bloomberg Article).
DV agrees with Mary and sees a correction once this "breadth thrust" loses it's supply of Pez
