Signs Of A Stock Market Correction Developing - SPDR S&P 500 Trust ETF (NYSEARCA:SPY) | Seeking Alpha

Signs Of A Stock Market Correction Developing - SPDR S&P 500 Trust ETF (NYSEARCA:SPY) | Seeking Alpha



James Kostohyyz has written a great article about how bear markets and corrections take place.  I agree with him 100% that bear markets occur when the economy is going downhill, and you can easily see this ahead of time at various Federal Reserve websites.  One of my favorite websites is the Chicago Fed where they feature the Chicago Fed National Activity Index (CFNAI).



On my main website, www.fibonacci-stocks.com, I have a page that is devoted to Chicago Fed figures of the CFNAI for good economic times.  The table at the bottom of the page shows typical readings for a sound economy.  As long as the numbers are + or - a fraction of 1, we are okay economically.  If you ever see a whole number -1.0 or greater, though, you need to sell your stocks immediately because a recession is coming or is already here.  Currently, we are not in danger, and James also agrees that we are nowhere near a bear market.



A stock market correction, however, is a very real possibility as James discussed extensively in his article.  The author presented some charts that showed convincing evidence that the bull market is running out of steam.  We will eventually have a big correction, and then the bull market will resume after the sell-off until we get into economic trouble.  The question is whether or not you want to ride out the correction.  In my opinion, the best thing to do is raise some cash now and buy bargain stocks later after the decline.