stock correction coming

ALL BUSINESS: Stock correction coming?




Last Updated: 9-February-2007 17:18:19



That helps to explains why all the recent stock market positives -- the Dow Jones industrials' record run, the longest stretch without a large price correction in decades, the Federal Reserve holding interest rates steady -- are being considered as much a curse as a blessing.

No one is saying the market is destined for a free-fall anytime soon, but there are legitimate concerns that the rally may be due for a pause.

You don't need to look far on Wall Street for cautionary commentary about the bull run that began in July. Few expected that surge to happen in the first place, and at many times in recent months, there have been forecasts that the market will start showing some fatigue.

Instead, the Dow went up seven straight months through January, the longest winning streak since 1995, and that thrust the blue chip index into record territory, which it continues to beat with gains already seen this month.

The Standard & Poor's 500 index, now at a six-year high, had its first eight-month run in a decade in January. Should that continue in February, it would be the first time since 1983 that it has had nine months of gains.

The Dow industrials average hasn't seen a 2 percent correction in more than 130 sessions, the longest run since 1954, and it has gone 53 months without a 10 percent correction for only the second time in history, according to Ned Davis Research. There has been not been a 2 percent drop in the S&P 500 in more than 930 sessions, the longest stretch ever without that kind of pullback, according to Birinyi Associates.