Gartman says US stocks set for 5% correction … or perhaps something far worse

U.S. equities are headed for a 5 percent drop – at least – after suffering their biggest falls since the election of President Donald Trump, says Dennis Gartman.

"This is the start of at least a 5 percent correction, and perhaps something far worse than that over time," Gartman said.

U.S. markets led the declines, with the benchmark S&P 500 index tumbling 1.2 percent Tuesday — and breaking a run of 109 trading days without a drop of 1 percent or more. The Dow Jones industrial average and the Nasdaq also suffered their biggest slumps of the year.

Alongside equities, base metals and crude oil posted lows while gold and bonds broke out to the upside, suggesting a wider shift in capital markets.

"I think there's something to the downside that could be quite serious," Gartman said. "Let us hope it's merely a 5-7 percent correction and nothing more than that."

"We've been saying that we expect a 5 to 10 percent correction. We've been saying that for weeks now," Julian Emanuel, equity and derivatives strategist at UBS, wrote in an analyst note.

"At the end of bull markets, earnings always look great. Earnings don't look bad until you've gone somewhere into an economic downturn."

"Earnings lag by at least a quarter, and usually by a half, so you're going to get the best earnings right at the peak of economic activity."

Source CNBC

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