Weighing the Week Ahead: Market Correction Coming?

Whenever there is a big market move – in either direction – the question arises: Is it too much, too soon? I predicted that this week's focus would be on whether it was time for the individual investor to return to stocks. That was a good forecast -- for about two days!
The media tilt ensued very quickly. Since consumers of financial media are looking for actionable advice, the sources have a tilt toward trading. We all know that markets do not move in a straight line, so any significant move brings out those planning to "sell the rips and buy the dips."
Here are three interesting perspectives:
Correction Ahead
Some of the calls for a correction even emphasize the recent shift in fund flows, reflecting the change in attitude by some individual investors. Here is an example from BofA Merrill Lynch strategist Michael Hartnett, reported by Matthew Boesler of Business Insider.
For Hartnett, this implies a possible correction of 5% over a month or so. The article cites similar forecasts from other Street analysts.
Probable New Highs
Charles Kirk has, as usual, a balanced viewpoint in his weekly chart show. While noting the potential for a correction, Charles expects a test of the old highs first, possibly followed by a completion of the current bullish chart setup. My brief summary is but a shadow of what you get from the weekly chart show. (The Kirk Report requires a small membership charge, and is well worth it).
A Longer View
Taking a longer view, Josh Brown has an excellent post, Ray Dalio Schools You on the Great Rotation Debate. This must-read article explains why the current inflows to stock funds are not merely from bonds and not just from individual investors. Josh has taken the key points from a Dalio interview, helping his readers to see what is really important.
Naturally, I have my own thoughts on this topic and I'll cover those in the conclusion. First, let us do our regular update of last week's news and data.
Background on "Weighing the Week Ahead"

There are many good lists of upcoming events. One source I especially like is the weekly post from the WSJ's Market Beat blog. There is a nice combination of data, speeches, and other events.

In contrast, I highlight a smaller group of events. My theme is an expert guess about what we will be watching on TV and reading in the mainstream media. It is a focus on what I think is important for my trading and client portfolios.

This is unlike my other articles at "A Dash" where I develop a focused, logical argument with supporting data on a single theme. Here I am simply sharing my conclusions. Sometimes these are topics that I have already written about, and others are on my agenda. I am putting the news in context.

Readers often disagree with my conclusions. Do not be bashful. Join in and comment about what we should expect in the days ahead. This weekly piece emphasizes my opinions about what is really important and how to put the news in context. I have had great success with my approach, but feel free to disagree. That is what makes a market!
Last Week's Data

Each week I break down events into good and bad. Often there is "ugly" and on rare occasion something really good. My working definition of "good" has two components:
  1. The news is market-friendly. Our personal policy preferences are not relevant for this test. And especially -- no politics.
  2. It is better than expectations.
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