CNBC contributor Ron Insana worries that “a meaningful correction of 10 to 15 percent” for U.S. stocks is certainly possible, “as Wall Street weathers storms that are blowing onshore from around the world.”
In a commentary for CNBC, Insana
admits he is “more cautious about our market than I have been in quite some time.”
He cites his concern about the plunge in China’s stock markets and the collapse of many commodity prices this year.
“And while U.S. markets are not terribly far off their highs, and have traded in an extremely tight range this year, the technical deterioration in U.S. stocks has been, literally, ‘breadth-taking,’” he wrote.
“It certainly seems that the market's composition, leadership, and external forces, do not support predictions of a late summer rally,” he said.
So his advice to investors?
“I would recommend taking profits and putting on some protective hedges against a long-only portfolio,” he said.
“Markets often climb a wall of worry and this market looks like its legs are weakening as it struggles to make it over the wall.”
Thus far, the stock market has been able to withstand the Greek debt crisis and the likely beginning of Federal Reserve interest rate increases this year, with the S&P 500 index fluctuating less than 2 percent below its record high.
But the market's footing is fragile, says James Paulsen, chief investment strategist for Wells Capital Management.
Acknowledging the upswing in stocks, Paulsen said the market could go higher in the short term.
"But we may get a full blown correction yet," he warned CNBC
, pointing out it's been "third-longest period in post-war history without a correction."
And some experts wonder if time and luck aren't running out for U.S. markets. There hasn't been a correction (or drop of 10 percent) in almost four years, writes Paul R. La Monica, digital reporter for CNNMoney.
“Since October 2011, the market has rebounded every time dips threatened to become full-blown corrections. That may be happening once again,” he writes.
“Grexit fears rattled investors ... but not so much to send stocks down 10 percent. Worries about China have not yet led to a big sell-off. Neither have concerns about the strong dollar, plunging oil prices, the likelihood of a Fed rate hike or ho-hum earnings reports.”
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