Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
  • Retire
    • Income Investing Guide
    • Retirement Articles
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
Login My Member Benefits Archives Research Your Team About Us FAQ
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
    ×
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
    ×
  • Retire
    • Income Investing Guide
    • Retirement Articles
    ×
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    ×
  • Subscribe
Enter stock ticker or keyword
×
5 Ways to Beat the Fed (and Crush Inflation)

Email this Article

Send with mail | ahoo instead.
Required Needs to be a valid email
Required Needs to be a valid email
Why a Market Correction Could Be Next
https://moneymorning.com/?p=1183102
Required Please enter the correct value.
Twitter

Why a Market Correction Could Be Next

Start the conversation

By MONEY MORNING STAFF REPORTS, Money Morning • July 20, 2021


Editor's note: For the first time, our chief investment strategist is broadcasting his FULL list of Stocks to Buy in 2021. Because he believes this year could be one of the biggest bull runs in American history. Watch this, and you’ll see him run through about 50 stocks. Click here to watch him break down the good, the bad, and the ugly.


Dear Red Alert Reader,

The stock market finally remembered that owning stocks can be risky.

After Friday's sell-off, the carnage continued on Monday as the Dow plunged more than 900 points at one point during the day. The biggest losers included commodity and financial stocks expected to benefit from inflation and rising interest rates.

Stocks fell by around 2% yesterday. A drop of 10% or more from recent highs would mean a market correction, and that's a possibility that investors need to take seriously right now.

Fear of another round of COVID-19 related slowdowns hitting the economy was one of the primary reasons for the steep sell-off. Cases, hospitalizations, and deaths related to COVID-19 are rising again in the United States, and that has spooked traders into selling the reopening and inflation at a furious pace the past few days.

New cases in the United States surged by more than 70% last week, while other parts of the world are seeing some of their worst numbers yet.

That also hit the oil market.

Oil stocks were also down sharply as U.S. crude futures tumbled 7.5% to $66.42. Traders fear that new travel restrictions will be put in place, and that will hurt oil demand. Oil has been weak over the last week as many traders were unwinding bullish positions established to take advantage of the global reopening of the economy

It didn't help that OPEC and its allies, including our good friends in Russia, have decided to ease production constraints that were helping keep prices up.

Now that you know why stocks are down this week, let's take a look at a market prediction of what could happen next.

We'll show you three numbers to watch to tell if stocks find their feet or if a market correction is in the works.

And we'll show you what to do about it...

What to Do About a Market Correction

If the COVID-19 variant continues to grow, we could see the current move to get people back in the office by many major employers come to an end.

If the states and larger cities go back to lockdowns of the service industries, we could see unemployment claims reverse direction and begin climbing once again.

Treasury yields continued to rise as the bond market is clearly not seeing lasting inflation ahead. In fact, it is starting to trade like bonds are beginning to reflect the possibility of another round of economic slowdown and deflation.

The 10-year bond yield dropped on Monday to just 1.19% as bond prices staged a strong rally.

The level of aggressive speculation has been growing in the stock market for months now. As a result, we have seen a constant flow of initial public offerings by companies of dubious quality along with the flood of SPAC mergers from earlier this year.

Meme stocks have redefined the concept of rampant speculation over the last few months too.

BUY THIS, NOT THAT: The best (and worst) stocks in America. Get the full list here.

Geopolitics helped fuel the Monday sell-off as well. The United States, along with the United Kingdom, Australia, New Zealand, and Canada, have accused China of opening a new form of cyber warfare with several hacks around the world of major corporations. The United States also confirmed Microsoft Corp.'s (NASDAQ: MSFT) earlier accusation that China was behind the massive hack of its e-mail program.

Anything that increases tension between the West and China is potentially bad for the stock market.

The next technical support level for the S&P 500 is around 4,327. That's at the 20-day moving average. If the market cannot hold that level, the next support point is near 4,239, which is the 50-day moving average and the area where the last pullback ended.

Should we fall all the way back to the 200-day moving average, currently at 3,890, it would be about an 11% decline from the highs hit just a few days ago. That would make this an official market correction and would also likely bring in heavy selling from trend followers that could drive prices even lower.

This week, we will see earnings from most major airlines, and dozens of regional and community banks, two of the groups hit the hardest on Monday. What the CEOs of those companies have to say will give traders and investors alike a better idea of what may lay ahead for the continued reopening of the U.S. economy.

Those banks could be an opportunity for investors too.

Banks, in particular, could be ripe for bargain shopping. Many quality regional banks are now trading at single-digit P/E ratios. Unless we get a full halt to the U.S. economy that throws commercial real estate markets into further turmoil, banks appear to be substantially undervalued at current prices. Any additional selling would present a buying opportunity.

We would resist the urge to chase commodity names as most of them have already had a spectacular run and are selling off from extended price levels.

And now is also a great time to jettison any bad stocks in your portfolio, like these...

Are These "Toxic" Stocks Lurking in Your Portfolio?

Almost no one realizes, but some of the most dangerous, portfolio-wrecking stocks are also some of the most popular picks on the market.

Our chief investment strategist is going live and shining a light on the specific stocks that should be nowhere near your portfolio.

In this fast-paced lightning round event, he'll also detail the stocks that every investor in the world should have in their portfolio right now.

This event could revolutionize how you make money this year. Watch now...

Red Alert Frequently Asked Questions

Follow Money Morning on Facebook and Twitter.

Why a Market Correction Could Be Next

July 20, 2021 by Money Morning Staff Reports

Start the conversation

Comment on This Story Click here to cancel reply.

Or to contact Money Morning Customer Service, click here.

Your email address will not be published. Required fields are marked *

Some HTML is OK

The stock market finally remembered that owning stocks can be risky.

After Friday's sell-off, the carnage continued on Monday as the Dow plunged more than 900 points at one point during the day. The biggest losers included commodity and financial stocks expected to benefit from inflation and rising interest rates.

Stocks fell by around 2% yesterday. A drop of 10% or more from recent highs would mean a market correction, and that's a possibility that investors need to take seriously right now.

Fear of another round of COVID-19 related slowdowns hitting the economy was one of the primary reasons for the steep sell-off. Cases, hospitalizations, and deaths related to COVID-19 are rising again in the United States, and that has spooked traders into selling the reopening and inflation at a furious pace the past few days.

New cases in the United States surged by more than 70% last week, while other parts of the world are seeing some of their worst numbers yet.

That also hit the oil market.

Oil stocks were also down sharply as U.S. crude futures tumbled 7.5% to $66.42. Traders fear that new travel restrictions will be put in place, and that will hurt oil demand. Oil has been weak over the last week as many traders were unwinding bullish positions established to take advantage of the global reopening of the economy

It didn't help that OPEC and its allies, including our good friends in Russia, have decided to ease production constraints that were helping keep prices up.

Now that you know why stocks are down this week, let's take a look at a market prediction of what could happen next.

We'll show you three numbers to watch to tell if stocks find their feet or if a market correction is in the works.

And we'll show you what to do about it...

What to Do About a Market Correction

If the COVID-19 variant continues to grow, we could see the current move to get people back in the office by many major employers come to an end.

If the states and larger cities go back to lockdowns of the service industries, we could see unemployment claims reverse direction and begin climbing once again.

Treasury yields continued to rise as the bond market is clearly not seeing lasting inflation ahead. In fact, it is starting to trade like bonds are beginning to reflect the possibility of another round of economic slowdown and deflation.

The 10-year bond yield dropped on Monday to just 1.19% as bond prices staged a strong rally.

The level of aggressive speculation has been growing in the stock market for months now. As a result, we have seen a constant flow of initial public offerings by companies of dubious quality along with the flood of SPAC mergers from earlier this year.

Meme stocks have redefined the concept of rampant speculation over the last few months too.

Geopolitics helped fuel the Monday sell-off as well. The United States, along with the United Kingdom, Australia, New Zealand, and Canada, have accused China of opening a new form of cyber warfare with several hacks around the world of major corporations. The United States also confirmed Microsoft Corp.'s (NASDAQ: MSFT) earlier accusation that China was behind the massive hack of its e-mail program.

Anything that increases tension between the West and China is potentially bad for the stock market.

The next technical support level for the S&P 500 is around 4,327. That's at the 20-day moving average. If the market cannot hold that level, the next support point is near 4,239, which is the 50-day moving average and the area where the last pullback ended.

Should we fall all the way back to the 200-day moving average, currently at 3,890, it would be about an 11% decline from the highs hit just a few days ago. That would make this an official market correction and would also likely bring in heavy selling from trend followers that could drive prices even lower.

This week, we will see earnings from most major airlines, and dozens of regional and community banks, two of the groups hit the hardest on Monday. What the CEOs of those companies have to say will give traders and investors alike a better idea of what may lay ahead for the continued reopening of the U.S. economy.

Those banks could be an opportunity for investors too.

Banks, in particular, could be ripe for bargain shopping. Many quality regional banks are now trading at single-digit P/E ratios. Unless we get a full halt to the U.S. economy that throws commercial real estate markets into further turmoil, banks appear to be substantially undervalued at current prices. Any additional selling would present a buying opportunity.

We would resist the urge to chase commodity names as most of them have already had a spectacular run and are selling off from extended price levels.

And now is also a great time to jettison any bad stocks in your portfolio, like these...

Are These "Toxic" Stocks Lurking in Your Portfolio?

Almost no one realizes, but some of the most dangerous, portfolio-wrecking stocks are also some of the most popular picks on the market.

Our chief investment strategist is going live and shining a light on the specific stocks that should be nowhere near your portfolio.

In this fast-paced lightning round event, he'll also detail the stocks that every investor in the world should have in their portfolio right now.

This event could revolutionize how you make money this year. Watch now...

Follow Money Morning on Facebook and Twitter.

7 Stocks to Sell Immediately

These popular stocks have hit their peak - get their tickers so you can take your profits and move on.

Access Now

7 Toxic Stocks to Sell Immediately

These popular stocks have hit their peak - get their tickers so you can take your profits and move on.

Access Now

Filed Under: Stock Market Tagged With: Stock market predictions, stocks to sell

LIVE
Visit Money Morning Live
Latest News

January 19, 2023 • By Money Morning Stock Research Team

These Stocks Could Go To $0

January 9, 2023 • By Money Morning Stock Research Team

The Government Is Pouring $391 Billion Into These Stocks - Buy Now

December 27, 2022 • By Money Morning Staff Reports

6 IPOs in 2023 You Can’t Afford to Miss
Trending Stories
ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us COVID-19 Announcements How Money Morning Works FAQs Contact Us Search Article Archive Forgot Username/Password Archives Profit Academy Research Your Team Videos Text Messaging Terms of Use
FREE NEWSLETTERS
Total Wealth Research Power Profit Trades Profit Takeover This Is VWAP Penny Hawk Trading Today Midday Momentum Pump Up the Close
PREMIUM SERVICES
Money Map Press Home Money Map Report Fast Fortune Club Weekly Cash Clock Night Trader Microcurrency Trader Hyperdrive Portfolio Rocket Wealth Initiative Extreme Profit Hunters Profit Revolution Warlock's World Quantum Data Profits Live Trading Alliance Trade The Close Inside Money Trader Expiration Trader Vega Burst Trader Flashpoint Trader Darknet Hyper Momentum Trader Alpha Accelerators

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell or Share My Personal Information