CHART: Stock Market Correction Risks Are Mounting – Money Morning

CHART: Stock Market Correction Risks Are Mounting – Money Morning

There are more warnings of a stock market correction circulating now – especially since the Nasdaq and S&P 500 both reached closing record highs Friday.

The Nasdaq Composite closed at a record high on Friday at 5,092.08. That was the first time the index had set a record in more than 15 years. The S&P 500 closed the week at 2,117.69. The Nasdaq and S&P 500 have now climbed 7.7% and 3% respectively in 2015.

At the same time, more than $79 billion has left U.S. stock funds this year.

This “big decoupling” between money flowing into stocks and company share prices is a sign of a looming stock market correction, according to analysts from Bank of America Merrill Lynch. A market correction is when there is a 10% or greater drop in share prices.

Check out BofA’s chart. It shows how the amount of money in U.S. stocks has fallen from about $179 billion at the start of 2015, to near $100 billion today.

The same research note also shows outflows in nine of the last 10 weeks. Investors haven’t taken money out of the markets at such a high rate since 2009.

“Correction risks will grow in [the] absence of fresh inflows in coming weeks,” analysts wrote.

To get more insight on the chances of a stock market correction in coming weeks, we asked Money Morning‘s Chief Investment Strategist Keith Fitz-Gerald what he’s telling investors to watch for now.

“The current bull market is now the fourth longest on record in the last 115 years and nearly twice the length of the average bull run,” Fitz-Gerald told readers this weekend. “At the same time, stocks are getting pricey and fears of a Fed-led rate hike are creeping in around the edges.”

“Yet, this is not the time to run for the hills,” he continued.

Here’s why investors shouldn’t flee when facing a possible stock market correction

How to Invest as Stock Market Correction Risks Rise

It’s only human to get nervous about a stock market correction. But letting your emotions decide your investing moves can lead to losses.

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CHART: Stock Market Correction Risks Are Mounting – Money Morning

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