The stock market is currently experiencing a period of uncertainty, with leading market technician Craig Johnson warning of a potential 10% correction despite the ongoing rally. Johnson, who serves as Piper Sandler’s chief market technician, has identified several technical signals that suggest the market may not be ready for a significant upturn.
Speaking to CNBC, Johnson explained that the market is currently pressing against the upper end of an 18-month price channel, indicating that it may not be primed for further gains. He also highlighted the uneven nature of the rally, noting that healthcare and financial stocks are lagging behind mega-cap tech stocks. This lack of uniformity suggests that the market may not be as strong as it appears.
Johnson’s warning of a potential 10% correction comes at a time when other market experts are also expressing concerns about the state of the stock market. Veteran investor John Hussman recently highlighted overvalued stocks and unfavorable market fundamentals, while renowned investor Robert Prechter drew parallels to the years leading up to the 1929 crash.
Market strategist Jon Wolfenbarger has also predicted a significant stock market crash and a year-long recession based on various economic indicators. Similarly, Wall Street strategist Tom Lee issued a warning about an imminent stock market correction following a 21% surge in the S&P 500 over 14 weeks.
These warnings collectively paint a concerning picture of the stock market’s current state and suggest that investors should exercise caution in the coming months. Johnson’s prediction of a 10% correction, which could bring the S&P 500 back to around 4,558 and erase all its gains for the year, underscores the potential risks facing investors in the current market environment.
As investors navigate these uncertain times, it is important to stay informed and consider the advice of market experts like Craig Johnson. By remaining vigilant and staying abreast of market developments, investors can better protect their portfolios and make informed decisions in the face of market volatility.
