This weekend's Barron's featured an interview with Ned Davis and
his top lieutenants discussing their views about the bull market.
And the big take-away was that their research suggests a big re-set
is coming in 2014.
It's hard to argue with any ideas about this bull market needing a
correction bigger than the 6% blips we've become accustomed to this
year. I'm all for a "cleansing" and fresh bargains before the
S&P goes to 2,000 and beyond. And, by the way, I think the
Secular Bear Market is over and we won't revisit the lows below
1,000. But that's a discussion for another time.
Anyway, the Ned Davis interview is definitely worth a read.
But what will be the catalyst to finally push institutions to
become net sellers of their shares and start waves of selling that
take the market to S&P 1600 (10% correction) or even sub-1500?
Sure the market is running ahead of the economy, but that might
well go on as growth metrics improve and there's a shift from the
Fed supporting the show to banks and corporations taking more risk
with their war chests of cash.
In addition to giving me your "Correction Catalysts" and timing,
answer me this:
Will the most-anticipated and most-publicized correction in history
ever actually happen with so many calling for it? Probably not when
most expect it to. In short, to reverse the freight train of
institutional money flooding into equities, it will take an
unexpected confluence of events.
I'll tell you my perfect storm of catalysts later today -- after I
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