Brilliant professionally and affable personally, my favorite investment guru is Jeremy Seigel of Wharton.  I follow his thinking often.  While he is not yet predicting it, he would not be surprised if the stock market entered correction territory, which is a 10% fall.  He feels this is possible due to the lack of breadth, that small cap stocks are lagging large caps, and that the VIX is so low, suggesting too little fear or too much complacency.  In addition, he thinks the Fed will increase interest rates next month.  Naturally, the market will overreact to that increase and fall.

My thought is that we’re already about 3% down.  And, does it really make any difference if the market falls a thousand points over the next few weeks and then starts recovering?  Such corrections are routine and healthy for the market.  Is it really a disaster if the market is only 10% from its record high?

Separately from Jeremy, the market reached its “death cross” yesterday.  This happens when the 50-day-moving-average crosses below the 200-day-moving-average and is a classic sell signal.  Normally. This would concern me a great deal, but I’m a little less concerned than usual, because the market has been so range-bound all year, without any violent swings.

What does concern me is the ham-handed approach China has taken to solve their economic problem.  It has given me comfort that they have sufficient power to make change, unlike the U.S., but they are mis-using that power, because they don’t seem to understand what they are doing.  They are dangerously close to starting a currency war.  This makes an interest rate increase next month much less likely, indeed this year.

It is too early to start raising cash but not too early to start thinking about it.