10/22/2018 A 15 percent correction is the gut check the market needs: Jim Paulsen

VIDEOS TRADER BIOS COMMENTARY

A 15 percent correction is the

gut check the market needs for
this bull run to continue, Jim
Paulsen says
Keris Lahiff | @kerisalison
Published 11:32 AM ET Sat, 20 Oct 2018

TRADING NATION

Consumer staples just had a blowout

week—but some think the best is behind
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optimistic the trend is sustainable.
Markets page to startbe
could the setting
video. up for an

 even deeper correction: Jim

Paulsen  
4:29 PM ET Fri, 19 Oct 2018 | 01:54
A 15 percent correction is the gut check
the market needs: Jim Paulsen
The S&P 500 is having its worst month in nearly
three years. But the worst has yet to come for
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 the stock market, according to Jim Paulsen,
CNBC MENU
TV investment strategist at Leuthold Group.
chief

The S&P 500 is having its worst month in nearly three years.
Small-cap stocks are getting hammered
But the worst may be yet to come for the stock market, according to — three experts debate what to do next
Jim Paulsen, chief investment strategist at Leuthold Group. The small-cap Russell 2000 index has seen
better days. The group of stocks has fallen into a
correction, and is currently on track for its worst
"My guess is that we're going to have a bigger correction than we've month since January 2016. Here's what three
experts have told CNBC in the last week about
had yet," said Paulsen on CNBC's "Trading Nation" on Friday. the move.

"I think a good gut check to sentiment, like a 15 percent correction,

Analysts are missing the mark on these
might be just the ticket to extend this bull market," he added. sinking stocks, but some may turn around
A handful of beaten-down stocks could be
The S&P 500 is currently 6 percent from its 52-week high set in late screaming buys, at least if Wall Street
forecasters are any indication.  
September, shy of the 10 percent pullback that represents a
correction. To get into correction territory, the benchmark index
would need to fall to 2,645, a level not seen since May. A 15 percent
drop would take it negative for the year. MORE FROM TRADING NATION

The charts are pointing to more trouble for the Nasdaq,

Paulsen told CNBC a correction is necessary to reflect a changing according to one trader
market environment where rates are on the rise, earnings are Chinese stocks break a two-decade trend, and that
peaking, and economic growth might slow. could signal more downside
Dow falls more than 300 points as the market's October
struggles persist
"What we need is a lower valuation, I think, to sustain a different
Four market experts weigh in on the biggest risks to the
environment if this recovery is going to continue," he said. oil market
Dow stocks Pfizer and UnitedHealth could be safety
plays amid market volatility
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10/22/2018 A 15 percent correction is the gut check the market needs: Jim Paulsen

"I don't think we can handle that environment at 20-some-times Beaten-up tech stocks to feel more pain, investor Paul
Meeks predicts
trailing earnings, probably more like 15 to 16 times trailing earnings
Housing stocks are having their worst year since 2008,
and we're a ways from that," the investor added. and some see even more distress
Five experts weigh in on Netflix's blockbuster earnings
The S&P 500 currently trades at 19 times trailing earnings, one of beat
its highest multiples in the past decade. High-growth sectors Cloud stocks like Adobe and Workday are surging, and
some say the best is yet to come 
including technology and consumer discretionary trade, with a Dow jumps more than 500 points, posts best day since
multiple above 20 times trailing earnings. March as earnings fuel rally

"It's probably time to get more defensive and not have as much
VIDEOS ›
octane on from here as you have earlier in this bull market," said
Paulsen, highlighting safety sectors such as utilities, staples, and real Investors may want to consider
getting defensive, Jim Paulsen
estate investment trusts (REITs) as good bets in this environment.  says  
Jim Paulsen, chief investment strategist at the
Defensive stocks have already taken the lead in recent months. The Leuthold Group, discusses his latest market
outlook with Mike Santoli.
XLP consumer staples ETF and the XLU utilities ETF have rallied
more than 3 percent over the past three months, while the XLK
Amazon, Microsoft and Alphabet
technology ETF and XLY consumer discretionary ETF have fallen by
are about to report earnings. Here’s
at least 3 percent.  what to expect  
Bill Baruch of Blue Line Futures and Mark
Tepper of Strategic Wealth Partners discuss the
big week of tech earnings ahead with Mike
Santoli.

Markets could be setting up for an

even deeper correction: Jim
 Paulsen  
This stock market could be setting up for a 15
percent correction as market shifts to a lower
valuation, says Leuthold Group's Jim Paulsen.

TRADER BIOS ›
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Stacey Gilbert
Stacey Gilbert is the head of derivative strategy
at Susquehanna.
Paulsen said a hard turn in the market, to favor defensive stocks over
cyclicals, suggested economic trouble ahead, too.
Lawrence McDonald
Managing Director, ACG Analytics
"If defensive stocks are taking leadership, what's that say about
upcoming economic growth?" he asked. "I think it suggests that
economic growth is going to slow more than Wall Street really is Rich Ross
ready for." Managing Director, Head of Technical Analysis,
Evercore ISI

The U.S. economy is expected to grow by 2.9 percent in 2018,

slowing to 2.5 percent in 2019, according to GDP estimates pooled
by FactSet. TRENDING NOW

Are you taking a defensive position in your portfolio? 1. A chart shows how
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changed since Trump
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VOTE Vote to see results 2. Stocks making the

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10/22/2018 A 15 percent correction is the gut check the market needs: Jim Paulsen

China stocks are

popping and history
shows that means
Investors may want to consider these Dow stocks

 getting defensive, Jim Paulsen

says  
5:30 PM ET Fri, 19 Oct 2018 | 05:12 4.
should be winners

Powerball now at
$620 million, while
Mega Millions jackpot
hits $1.6 billion. Do
Disclaimer this if you win

5. Elon Musk says first

high-speed transit
Keris Lahiff tunnel is almost done
Markets Producer and will open on Dec
10

RELATED SECURITIES

Symbol Price   Change %Change

XLY 106.34 -1.05 -0.98%

 
XLK 70.01 -0.03 -0.04%
 
XLU 54.57 0.84 1.56%
 

XLP 54.69 1.22 2.28%

 

S&P 500 2767.78 -1.00 -0.04%

 

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10/22/2018 A 15 percent correction is the gut check the market needs: Jim Paulsen

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