Tuesday, 25 August 2015

US stocks in correction, may still “come out OK”

The S&P 500 fell 3.9 percent on Monday.

The decline left it 11 percent below its high in May, putting it in correction territory.

The market did rebound from an early plunge, only to face renewed selling in the afternoon.

Some analysts remain optimistic though.

“As prices go lower, we see selective opportunities to buy as opposed to a provocation to become more bearish,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.

“When the issues are on the table, the market will do what it has to to adjust and come out OK on the other end,” said Laszlo Birinyi, the president of Birinyi Associates.

Indeed, historically, data from Bespoke Investment showed that following a 5 percent decline, the market is on average relatively flat the next week, up 1.65 percent over the next four weeks, and up close to 5 percent over the next 12 weeks.

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