That is what I will be saying this week if the market has a down week. Of course, I have been saying it for 3 weeks, but the market has to have a correction here. OK, we did have a correction early last week and was quick enough to take some profits. But this week, it really looks like a correction is in order that sticks a bit.
There are a few reasons I say this. First, the action on the VIX late last week looked similar to action we had in Jan/Feb when the market would have a little run but the VIX would not move. The VIX held steady late in the week even during some good runs in the market. I think the sentiment is loosing its luster, finally.
Second, just look at the SPX 6 month chart. I am not talking about Bollinger bands, or moving averages. I am talking about the "head" shape it is beginning to make. A downward sloped curve is being formed and seldom does this reverse direction once the curve begins. Perhaps the halfway point of a head and shoulders.
And of course third, the economy sucks. I splurged this week to do my best to help the economy. Spent Sunday on my boat with a friend of mine who is unemployed and has been for 6 months. Had his whole family with us and we just showed them a great time. Felt good that he was able to forget his problems a bit and his family have such a good time. Ended with a really great dinner and the beer and wine flowed all day and all night. It was very gratifying. But it doesn't help his employment opportunities. Which continues to make me sad.
Another close friend of mine lost his job last Thursday after 14 years at the same company. He has about 6 months of reserves which includes about 4 months of severance. 4 months of severance for 14 years of dedication??? Whatever.
My neighborhood will be filled with foreclosures if some of these people do not find jobs in the next 6-10 months. The cancer is spreading. The patient seems to feel fine, but has no idea of the consequences coming.