U.S. Stocks May Be Starting ‘Correction,’ CLSA Says

(Bloomberg) -- U.S. equities may be headed lower as technical indicators point to weakness and as economic figures disappoint investors hoping for a recovery, according to Christopher Wood, chief strategist at CLSA Ltd. The Standard & Poor’s 500 Index dropped 2.8 percent to 1,036.19 on Oct. 30, and is down 5.6 percent from its 2009 peak of 1097.91 on Oct. 19. Wood noted in a report today that the gauge is below its 50-day exponential moving average, which according to Bloomberg data stands at 1,047.2. Dropping below the average, which differs from a simple moving average because it assigns more weight to recent data points, may be a signal of further declines.

“After Friday’s stock market action, the risk of the first real correction since the March bottom has risen significantly,” Wood, the top-ranked Asia strategist in Institutional Investor magazine’s annual poll, wrote. “Fundamentally, it is also interesting that the American stock market has finally started to respond to disappointing consumption data.”

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