January has seen its ups and downs so far this year, but the last two days have pulled the market into negative territory for the year. The S&P 500 is now down 3% for the month. Is this the beginning of a Bear market or a healthy correction?
In our year end blog on December 27th, we called for a January pullback based on market valuations being too high, tapering by the Fed, and the expectation of higher interest rates. It all started with some bad news coming out of the Emerging Markets, specifically China then Argentina which sent the market down over 300 points on Friday. Earnings have come in relatively well so it is not corporate growth that is spooking the markets, and that is why we think this is a healthy correction and not a bear market. If Granite Group is correct, this pullback is normal and should be deemed an opportunity to put some money to work in the equity markets.
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