According to this article by their Co-President Daniel Pinto: https://www.cnbc.com/2018/03/08/jp-morgan-co-president-warns-of-deep-correction-for-stocks-totaling-as-much-as-40-percent.html he sees a correction of as much as 40% in a couple of years. He does say that he expects the market to go up for another 1 or two before the correction comes (if it ever does). Let’s look at the charts and see what this would look like.
If The Correction Happened Tomorrow
Using the S&P 500 Index if the stock market correction happened tomorrow then we can expect the level to quickly reach at least 2,200. Of course the move could go further but that is the minimum for the correction to happen and for it to be complete. Yes that would be a good sized drop but 13 months ago we were at that level.
These Types of Articles Are Worthless But Fun To Speculate
For one the author hedges his bet big time by saying it is at least a year or two away so he bought himself some time. Secondly if the correction never happens then this article will never be brought up again. If it does happen they this article will be brought back up to make him look like a genius. I agree with his statement “It could be between 20 and 40 percent depending on the valuations at the time. ” I can give a more precise answer though. There will be at least a 38% retracement just like there is in all corrections to the downside as I have shown from my charts over the year and the way I trade over the past year. The retracement can definitely go lower than 38% but that is the minimum for it to complete.
My No Hedge Prediction
As you can see price is still firmly in the middle of Andrew’s Pitchfork. It did have one break of it which signaled its first weakness back in January of 2016. Until price breaks AP then the move is still to the upside. But where and when do I think the correction will take place?
I think we’ll hit $3164 which is the 685% Fibonacci Extension level. When will that happen? I do not know, I haven’t been able to figure out how to accurately measure moves. But I think price will run up and touch the 685 fib extension level which will provide the resistance for price to eventually break out of Andrew’s Pitchfork and then the correction will be on. Until then I would buy any weakness in any stocks you like. But if price does break out of Andrew’s Pitchfork then I would be EXTREMELY cautious because the correction could be underway.
