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The Dow Could Easily Correct to 14,000

Stock-Markets / Stock Markets 2013 May 29, 2013 - 01:46 PM GMT

By: DailyWealth

Stock-Markets

Predicting a stock-market correction is a rough business these days. The Dow Industrials seems to add a few hundred more points each and every week.

It makes sense to expect a market correction. No stock, commodity, or sector runs higher without taking a break. That's just how the market works. But if stocks do sell off, how much can we expect from a natural, healthy market decline? Today's chart provides a clue...



Old market hands say it's reasonable for a bull market to "retrace" 50% of a big gain before heading higher. Since bottoming in November, the Dow Industrials has climbed from 12,542 to around 15,379. Should the Dow retrace 50% of this big rise, it would take the index all the way down to 13,961.

Bottom line: Sure, the market is due for a correction. But don't be surprised how deep it goes. And remember that it's not unreasonable to expect a decline all the way down to the 14,000 level.


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