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And 500 dipping below its fifty day moving average the first time this year.
What does it mean for stocks and how I play is volatile and uncertain NASA calls a market that's bringing Dan on -- -- -- direct research director.
And -- capital markets did interview on us right now okay so.
We have guests here on Tuesday that said Monday's -- not the correction we were looking for just a one off.
Let's remains to be seen I mean I think we can't have a larger correction and we've seen thus far.
At the levels we're at today that it has some peas off maybe 3% from its -- don't forget it hit.
New all time secular highs of 1597.
Again what we're looking for is around 1540.
It's just a little bit below their fifty day moving average that you were just -- saying.
Our communities if you take out that 1540 level we can grab more sellers and from -- you know from the sidelines and they could push this down more aggressively.
We would think down and maybe 147515100.
That would give us a correction in the magnitude about 78%.
Off the highs I think that would shake out a lot of people.
But then the last time we actually closed below the fifty day moving average we went down -- this is October went down roughly 6%.
This time around why you think -- be a little bit greater there are other people who think would be far greater.
The argument being at the revenue -- the earnings reports are seeing right now we did this -- -- all that revenue and a lot of the companies reporting.
Why do you think that it wouldn't be worse is what I'm getting that -- That that -- this as we don't think it wouldn't be worse for just sort of looking at the different levels where buyers would come in and try to stabilize the markets.
In truth I I I agree that we could see a market correction in excess of 10%.
Historical analog have shown us you know at this stage in a market cycle you could see corrections.
To the two -- until about a 20%.
But the you know -- the issue this is what it's gonna trigger that.
We personally don't think it's going to be anything internal to the markets we think it would be something more macro induced some type of exhaustion a shock that could spook investors at this point.
Take out that 1540 level.
That's supplement my backup -- if you will for second so this news secular cycle you're talking about.
You say that you expect the markets to kind of move into a deflationary.
Bowl cycle can you explain that.
Sure well -- -- once we get on the other side of of -- correction and again a significant correction we do think the markets are changing their their overall cycle.
We think what's happened is -- over the past thirteen years.
Valuations and equities have been grinding lower and lower such that you know as we just broke out to new highs on the S&P 500.
Really the valuation on that benchmark -- cheapest as it's been in twenty years.
So what happens in the news cycles when breakout to new highs and -- you have valuations that are attractive relative to other asset classes.
That tends to start a new cycle we think in the next cycle equities will be the best performer they will outperform commodities on a relative basis.
And quite frankly we think it's going to be in a rising rate environment eventually you know once -- episode takes its foot off the gas -- It -- -- out of the question of whether the Fed takes its foot off the gas pedal as one people can't answer nor is timing the market but I got aspect.
When does that -- again that -- inflationary cycle you talking after the summer next fall.
-- I think it's starting right now I mean we're we're we're chipping away at the ice again.
You know we've broken out to new all time highs in the stock markets not just the S&P but the -- Also the small and mid cap benchmarks as well they broke out to new highs.
Once you do that history tells us.
You're sort of beginning that next cycle the may not be in the nice -- package over the short run the markets are certainly.
Sloppy right now we could have this sort of increased volatility this type of back and forth between the different asset classes.
But I honestly think we're making the transition right now so if you're a long term investor and I'm not talking about long term for it.
Two or three years back -- that if you have that you know five to ten years even fifteen years out.
We believe you should be buying equities very aggressively here not worrying about short term corrections.
Because we think this is the start of a new cycle -- equities are going to be one of the best performing classical.
Anybody with a forum -- -- right now listening to you is really happy and Dan contract -- with -- see any capital markets -- should be financed.
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