This Could Be the Spark That Sets Off a Correction
This Could Be the Spark That Sets Off a Correction by Joseph Hargett – Banyan Hill
Are you worried about a stock market correction?
If you follow the talking heads on Wall Street, you might be a bit concerned. Still, the market continues to march higher, so you’ve probably set those concerns on the back burner for now.
After all, the S&P 500 Index is fresh off a six-session winning streak. It and its companion indexes are also trading in an all-time high territory.
Economic reports, while not stellar by any means, are showing growth. Many in the financial media believe that the U.S. economy just needs a little boost from Washington via tax reform or loosened regulations to get the ball really rolling.
And if that wasn’t enough, this bull market continues to bear down on the accelerator despite tightening monetary policy from the Federal Reserve.
So, it’s easy to see why quite a few investors are holding tight to the bull’s reins and riding this rally higher without too much concern over a correction.
However, if you’ve kept up with our commentary here at Banyan Hill, you know that this bull market is just about out of gas. U.S. gross domestic product growth, or lack thereof, is becoming a real concern. And the popularity of exchange-traded funds has grown to bubble proportions.
So, if you are not worried about a market correction, I’m going to show you yet another reason why you need to start preparing now.
Finding Fault With FAANG
On September 25, technology stocks suffered a broad-based decline. The Technology Select Sector SPDR ETF (NYSE: XLK) was down more than 2% at one point during intraday trading before finishing off its lows.
Solid FAANG stalwarts like Facebook Inc. (Nasdaq: FB) and Apple Inc. (Nasdaq: AAPL) dropped more than 5% on that day, driven not by industry news, but by a broad drawdown in the sector as a whole.