Stanley Crouch, who is Chief Investment Officer of Aegis Capital, came on CNBC today and he is calling for pullback in the stock market and in risk assets. Not just a small correction. Crouch is calling for a 15% to 25% market correction in the coming weeks. To add insult to injury, he doesn't see a central bank put and he thinks that the Fed will stand idly by.
Crouch's position is that if the peak in the S&P 500 was truly in on September 14, then the effects of QE3 lasted about 22 hours. He is calling for more downside based upon historic moves.
He said that the S&P 500 will need to hold support at about 1,330 otherwise then maybe the lows of October 2011 will be seen again. After we took a look back at that time, it is important to realize that the lows dipped actually down as low as just under 1,075 during that month.
With the S&P 500 Index around 1,437 today that first key support level, that first support would represent prices of about 7.5% lower than today. If you go to Crouch's extreme case where the market goes back and retests the lows from last October then the losses from today's price would come closer to 25%.
JON C. OGG
Filed under: 24/7 Wall St. Wire, Active Trader, Analyst Calls