The correction in stocks continues.
The S&P futures are now down 5.3% from the April 1 record high. Nasdaq futures are down 5.8%. Dow is down 6.2%. And the Russell is down 9.5% (20% lower than the record highs of November 2021).
Interestingly, it's not the broad indiscriminate selling of stocks you might find in an economic shock, or the unwinding of a grossly overvalued market.
Over 40% of the S&P 500 stocks were up today (4 out of 10 sectors).
This continues to look like a technical correction in a bull market. Not only do we have the catalyst of a new industrial revolution underway, but the economy continues to be flush with cash.
Remember, we've looked at this chart of money supply …
The money supply remains trillions of dollars above trend. And Biden's proposed 2025 budget would require printing another $1.8 trillion.
And if we extrapolate out the trend (crudely) in money market funds, the balance there is around $1 trillion above trend.
So, the correction is a buy in stocks. It's a matter of when.
As we discussed yesterday (here), given the adjustment in rate expectations, and the headline risk with Israel/Iran, it's fair to expect a deeper correction, still. With that, based on historical performance of the S&P 500 we should expect intra-year corrections, on average, of better than 10%.
