Global Equity Markets: Recession? Or Correction?
by AL MARTIN (AL MARTIN RAW)
(1-28-16) The markets have been on a roller coaster ride since the beginning of the year. What does this mean? It’s an overbought market coming into the first of the year with Price/ Earnings ratios way above historic averages, earnings falling down and global growth forecasts slowing.
A lot of investors were short – and they stayed too long. They got flushed out in last week’s short-covering rally, but as always short-covering-led rallies create fresh shorting opportunities from higher prices.
We have had a correction in the market up until last week. The S&Ps traded down to 1800. We had a full blown correction and in most of the world’s markets as well.
There are different corrections and it depends on how you frame it – 10% corrections, 20% corrections and 30% corrections. Classically in a bull market, we had a 20% correction. Now it depends on whether the lows, in the S&Ps and in the planet’s markets in general, are going to be able to hold or not.
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* AL MARTIN, author of "The Conspirators: Secrets of an Iran Contra Insider," is an Independent Political-Economic Analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC.