Are Stocks Due for a Correction?

The S&P daily chart does not look good for the bulls because it appears that a short-term correction is forthcoming.

The S&P 500 has been stuck between 2,100 and 2,200 for quite some time.  It has also been forming lower highs since August.  The chart does not look particularly encouraging for the buyers.  If it’s indeed going to be a correction, the question is how big the correction is going to be.

The U.S. economy is good.  Europe’s situation is okay.  The uncertainty is the Brexit, but its effect should be limited.  Geopolitical problems are always a wild card.  I don’t think the correction, if there is one, is going to be detrimental.

The long term investors have a few options:

  1. Do nothing.  Weather it out.  One can actually buy more shares when prices drop.
  2. Temporarily move funds to bond funds or cash.
  3. Move to Value funds.  These funds aim to invest in stocks that are undervalued.

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