Wall Street primed for biggest correction since start of 'bull' market

Wall Street is now primed for the biggest 'correction' since the start of the current 'bull' market in March 2020, Marketwatch's Mark Hulbert wrote.

Hulbert was citing Hayes Martin, the president of investment advisory firm Market Extremes.

According to Martin, the US stock market's internal health was now the worst that it had been since October 2018, when it began a drop that eventually saw the S&P 500 erase 20% of its value.

Thing were not as bad now as in 2018, so the adviser was now anticipating a decline of 10% or greater for the main stock market gauges.

When? Any day now, but no later than mid-August, he believed.

In particular, Martin noted the growing number of stocks hitting new lows versus new highs.

That was especially evident in the Russell 2000 index of small and mid-cap stocks.

13 July saw the second consecutive day of more new lows than highs in the index - something that had only occurred thrice since June 2000.

After all three instances, in September 2014, July 2015, and October 2018, three months later the S&P 500 and Russell 2000 were to be found at least 10% lower.

The S&P 500 was one area of the market where there were no "dangerous" divergences.

Nevertheless, he went on to add that the present "severe2 divergences were coinciding with a severe overvaluation in stocks so when the market did decline, it would probably do so by more than would otherwise be the case.