Genuine Trading Solutions President and CEO, Dwayne Strocen announced today "The stock market indices of the United States and ultimately world markets are poised for a major correction in 2013". He cites his reasons as follows:
The CBOE Volatility Index or VIX is widely considered the best gauge of fear in the market and has an inverse relationship with the major indices such as the S&P 500. On Friday January 18, 2013, the VIX closed at a five and a halfyear low of 12.46, indicating optimism and good times ahead. A level not previously seen since April 2007, one year prior to the great recession of 2008. Traditionally known as the euphoria phase of an economic cycle, it is also the harbinger for a stock market correction, catching by surprise both the professional and amateur investor alike.
While the economy is far from firing on all cylinders the Stock markets are now flirting close to all time highs. It is then with no surprise that inverse to the VIX, the S&P 500 closed Friday at 1480.94. A level itself not previously seen since December 2007, though still shy of its all-time high set two months previous. While in over-bought territory, the S&P is not yet considered dangerously over-bought. It all comes down to too much too fast. Yetthe long term indicators seem to indicate there is more to be concerned about.
The technical indicators are not suggesting an imminent correction within a matter of days. They do suggest a more likely scenario of possibly sometime in the spring of this year. “While we are not contrarians”
The stimulus for any large correction could come from any number of sources. As we experienced with the Greek crisis, the catalyst for such an event may not be within the control of local government or within the ability of regulators to forecast or foresee. Such events tend to exceed international borders and if occurs, will likely affect global markets and their exchanges.
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Johndenes at reocapitalllc.com