Stock Market Corrections

Dow 11/08/2016 18,332

Dow 01/26/2018 26,392

A proper correction would be -2639 to 23,753

We need to get a total drop of 2639 to call this the long-overdue, needed, and very healthy correction (defined as a 10% drop) what it should be. It's the nature of markets to get overbought in a long term run up and the slack has to be removed before it can resume its upward trend.

Corrections are like cleaning the litter-box. They are dirty, messy, unpleasant, smelly, and required for household health.

I'm not predicting anything, just stating market theory based upon history.

Corrections are triggered by events - a bad earnings report by a bellwether, a major disaster, an assassination (sorry haters, not this time), or in this case a rise in the interest rates and a fear of a continued rise. This would make problems for servicing the nation debt, making it more expensive to grow businesses, drops in sales of things that require debt (cars, boats, houses, RVs and other big toys).

Plus, the guaranteed return of a 10 year treasury note is getting to look better than risking money in the stock market.

They tell you that market prices are based up the future earnings (and dividends) of a company. They even have formula to make predictions. Of course, if the experts were right, we could get very rich, very fast, but as is the case, more often than not, they have their heads up their asses.

here are very accurate formula that consider these variables plus a top of technical data. But the brunt of these have been dampened by regulatory brakes.

Market prices are based upon the perceived direction of the stock, or, in the case of the newer index options, the general direction of the market.