Analysts Agree That A Correction In Stocks Is On The Way

  • Posted Friday, August 29, 2014 at 09:07 PM

TANGIBLE INVESTMENTS - Los Angeles - by James O'Dell - Gold and Silver prices retreated on Friday as Gold eased 0.20 percent to $1,286.80 an ounce, but remained on pace to end the month with a modest gain, while Silver dipped 0.36 percent to $19.47 an ounce, as equity markets tumbled on both sides of the Atlantic.

While analysts won't say equity markets are in bubble territory, they do, however, agree that equities may have reached their peak in the shorter term after reaching record highs earlier this week and are expecting a correction. Two experts earlier this week told CNBC that stock markets could soon plummet by as much as 60 percent.

According to David Tice, of Tice Capital, a loss of confidence in central banks by the international community will lead to a 30 to 60 percent market decline. This crash will start, said Tice, with disillusionment in the Fed's "confidence game," which will see inflation spike, and the Fed scramble to boost rates, and that is when the Fed begins to lose control.

Technical analyst Abigail Doolittle agrees adding that "Unfortunately, I think it could come on a crash similar to what happened in 2007." Doolittle, founder of Peak Theories Research, said on "Squawk Box," just a day after the S&P 500 closed above 2,000 for the first time ever, "It's tough to know what the exact catalyst will be, but that's the very nature of that kind of selloff. They start slowly and then happen very suddenly."

Doolittle says that the bull market trend over the past five years has begun to reverse and "When you see that kind of gyration around the trend, typically it suggests you're going to see some severe volatility." Doolittle added that "As scary as it is, I think that we could see possibly a 50 percent or 60 percent correction—an equal and opposite reaction to all these unusual policy moves."

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