Here in the US, there are many factors that can contribute to a situation in the stock market that is out of proportion to reality. Recently, there have been a number of contributing events: turmoil in foreign markets such as Asia and Europe, the huge plummet in gas prices, and the recent positive economic reports for the US economy. The market must be corrected to compensate for overreactions to these events.
There has been a run in the energy sector since the Bush Administration that has overvalued these stocks. Now that a price war has erupted, we should see a correction in this sector and all other sectors connected to it. While the bulls have been running in energy, several other parts of the market have been undervalued like automobiles and housing. Virtually none of these areas are trading where they should be based on market value and performance, so a correction is inevitable.
Yes, because when stock market corrections happen t usually makes most people happy.It also provides investors with reality checks on stocks, bonds and money. The best news is that when stocks are due for correction, it remains a secret on Wall Street. Stock prices should turn south for a while.
In fact, the correction has likely already started. A market bear, bull or correction can really be judged until it is over, but oil prices are likely to continue to fall which will keep the market down. Additionally, interest rate increases should have some negative effects on housing prices. A proper and orderly correction is in order for the US market.