Is there a major correction in stocks?

One of the questions that some investors are asking at the moment is whether equities are losing steam in their quotations. Because the correction that is being generated in some stock indices is coming to worry some retailers that have open positions. And they want to know what to do with their investment portfolio. Whether to sell the securities or, on the contrary, continue with their positions as before. A very difficult personal decision to make that will depend on many parameters, including the profiles they present as a small and medium investor

Because it is true that at the moment nothing is happening in the financial markets. But only for now, because tomorrow the scenario may be radically different. Not surprisingly, we are talking about the bag with all that this means. Of course, it cannot be forgotten that in equities there are many titles that have performed well in recent times.  With revaluations above 20%, even higher in some very specific cases.

But likewise, there are some companies that are beginning to develop some signs of weakness. To the point that at any moment they can change their situation and with it also the trend of the Spanish stock market. Going from an uptrend to a bearish one. Because indeed, it may only be a matter of time. Because no financial asset goes up and down forever. Not much less, as you may well know from your own experience in recent years. Although to record this change it will be necessary to check how this semester of the year is going to close.

Is it a correction or something else?

It is the million dollar question among small and medium investors. Although at the moment with a difficult answer or at least with a great forcefulness in the prediction. The truth is that everything seems to indicate that we are witnessing a generalized correction in the main equity markets of almost the entire world. S would be in this case a healthy correlation of forces between buyers and sellers. It is enough to remember that there are already several months in which the international stock markets are showing a very well-defined uptrend. And in the stock market, nothing goes up and down forever.

As long as the supports from which these increases originated are not exceeded, there should be no fear for the evolution of the financial markets. At least in the short term, which is where the operations of many of the small and medium investors are headed. Another very different thing would be that these levels of which we speak were violated. Because then it would be something much more serious such as a Change of trend. And there would be no other investment strategy than to get out of the financial markets as soon as possible.

At the moment we are not in this situation, but it cannot be completely ruled out either. In this sense, it will be the equity markets themselves who day by day give the main clues about what is happening in the stock market. So that in this way, you can justify your decision regarding if the shares are worth buying or selling. At the moment it is too early to venture with a minimum of objectivity. Beyond certain comments starring some experts in the world of money and investment.

Bad months for the stock market

Either way, it is not a very suitable period to invest the savings in equities. If not rather the opposite, to take a little break or rest and another the evolution of the different financial markets comfortably from the sidelines. To make a wise decision just back from vacation this coming summer. It is one of the most sensible strategies that you can use from now on. It will serve you with a really very useful formula to defend your interests and relationships with the always complicated world of money.

Because indeed, the stock market has not been very fruitful between the months of April and July. But rather the opposite, since this period of the year has been used to undo positions. Sometimes with a virulence above the usual and unlike other months of the year. It is not a good period for you to carry out your operations in equities. But rather the opposite, so that you can take a little break and can return after the summer to resume your relationships with the financial markets.

Historically it has always been this way, as you can see with the prices of the main stock indices around the world. Although this does not mean that a business opportunity very profitable during this period. Although they will be from a point of view point of view and not on a regular basis. To the point that in these very special months the trading volume drops with great intensity. It will be one of the most effective signals you have to get away from any position opening.

Lower liquidity of securities

This is another of the most important characteristics of the investment in these months. Because when spring appears, the exchange of titles is less than in other periods of the year. As a consequence of this particularity, the values ​​with less liquidity they become much more dangerous. The reason is because they can be more easily manipulated by the strong hands on the market. With very few titles they can boost or drop stocks more easily. To the point of showing very high growth or depreciation. Highly paid for speculative operations.

As of these months, the degree of liquidity is less and less until it reaches its maximum exponent that takes place during the summer months. In order to to rebound at the end of September. With this series of data you have to play to make your operations more profitable. To do this, you must be very attentive to any breakage of supports and resistances. It can be a very objective clue as to where things are going in the world of money.

From this scenario, it will always be more difficult for you to carry out any operation. Especially those that are linked to purchases. Because normally we are talking about a downtrend, or at least lateral, in this analyzed period. You should not rush, of course not, because any mistake you make can be paid for very dearly. Even with a level of disability that you may not even be able to assume. It is one of the risks involved in opening positions on the stock market in this part of the year.

Depth in cutouts

How far can these possible cuts in international equities go? Well, it is a question that is difficult to answer due to the many variables that may happen during these months. From the elections in some European countries to the evolution that interest rates may take on both sides of the Atlantic. But due to the recent and important rise in the stock market in the preceding months, it cannot be ruled out that the corrections may be of some relevance. Even in the case of Spanish equities as for visit levels of 9.000 points in the Ibex 35. Even further if the short positions are really very strong.

In this sense, the next two months will be very important so that you can detect movement of some importance. So that in this way, you are inclined to perform partial or total sales in your portfolio. With the objective set already in the next summer. To the point that you can be the pretext for you to leave, even temporarily, the financial markets. As a strategy to protect your interests as a small and medium investor.

Another very different thing is if your claims are to enter the financial markets. It will carry more risks and therefore the most sensible thing will be to stay out of the bag. Because indeed, there is more you can lose than gain. It is something that you should not forget if you do not want to have a negative surprise from now on. Not surprisingly, these kinds of markets become more volatile. More than in other periods of the year. With greater differences between their maximum and minimum prices.

How to act on the stock market?

They are months in which your experience must prevail over other considerations. Only in this way will you be in a better position to weather the possible scenario of significant cuts in the equity landscape. Where there will always be some indices more prone than others to lose positions in the quotation of their prices. Not surprisingly, it starts from different trends. Your point of view should focus above all on the sectors or indices that best technical aspects present at this time.

And of course, you must be very receptive to business opportunities that will surely appear at any time. For which you must have the necessary liquidity to face the operations. You cannot forget about this aspect that could ruin your investment expectations. Because it is one of the main mistakes that you have been able to make in other years. Well, thanks to these tips you can solve this problem more effectively. Even with more profitable operations than until now. Because this is what we are talking about, and it is a completely unpredictable market.