US stock market at “risk of correction” but emerging markets may lead the way back up

The S&P 500 fell 0.2 percent last week, ending a four-week winning streak.

Lakshman Achuthan, co-founder of the Economic Cycle Research Institute, thinks that the stock market may be on the brink of another correction.

“We're still in this slowdown. There is more to come. It is not over,” he told CNBC on Friday.

Achuthan said that as long as there is a slowdown, “the risk of a correction remains”.

On the other hand, stock buybacks could help support the market.

JP Morgan's chief US equity strategist, Dubravko Lakos-Bujas, wrote on Friday: “Despite the recent market volatility, buyback activity has been very strong during the fourth quarter and we expect it to remain robust in 2019 given profit growth, lower valuation, and a record high $700 billion available to execute under existing authorizations.”

Also, Achuthan said that the global economy may be “where we need to see the bottoming first” and that may well be happening.

Reuters reported: “This weekend marks a year since the start of one of most comprehensive global bear markets on record, but just as the developing world’s equity indexes were first to fold last year, now they are leading the charge back up.”

According to Reuters, many global stock market indices began to rout “within hours of each other” last year but the MSCI's emerging markets index began to rise at the end of October, two months earlier than the world index.

Since then, the Turkish stock market has risen 20 percent from its low and the Brazilian market is up 40 percent and at an all-time high.