LIVE MARKETS-Volatility may also bring opportunity

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VOLATILITY MAY ALSO BRING OPPORTUNITY

Retired strategist Jim Paulsen believes the stock market will find its correction/bear market low this week or in the next few weeks and it will probably not be much lower than it is already.

Paulsen, an economist and seasoned Wall Street watcher who most recently worked as chief investment strategist at The Leuthold Group, says that even if this view proves correct, the stock market will likely remain volatile for several more weeks and it may take time before it again trends higher.

"Challenges persist and unknowns are still ample, but Fear is evident, caution is everywhere, buying power is building on the sidelines, valuations have improved, and concentration has been reduced," writes Paulsen in his latest "Perspectives."

Paulsen admits that his views "may prove far too rosy," and he can't rule out a much larger stock market slide, nor a recession.

However, with the S&P 500 flirting with a bear-market decline and without a recession (which he still thinks is unlikely), it seems doubtful to him that the stock market will decline significantly more.

In this regard, he advises investors to focus less on what may happen over the next couple months and more on where this may shake out a year from now, as he believes that buying when fear is so widespread, (VIX .VIX around 50), should prove to be a good decision several months from now.

Paulsen adds "Volatility will probably give you several opportunities in the coming weeks. I’m not sure I am ready to wear it proudly yet, but I do have my 'Bull Cap' back on! Let’s hope my thinking doesn’t prove to be just Bull."

(Terence Gabriel)

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