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Some disturbing signs are appearing that could point to a short term market correction soon.

Firstly, the Morgan Stanley european equity has noted that the MSCI’s main europe index has risen 50% y-o-y. Based on statistics, this has indicated a long term bullish signals but doesnt bode well for the short haul. On 77% of teh time, the equity markets have fallen over 4% over the next six months. The series of good economic news that is slated to come out may turn into bad news as this will sprompt central banks to a policy reaction and send bond yields and inflation up.

Second signal comes from America Merril Lynch whose data from 200 over fund managers shows that the cash holdings had dropped to 3.5% of assests among the group. Base on historical data, when the cash holding drops to this level, equities are slated to decline 7% over the next four to five weeks Although we are currently in a cyclical bull market, the short term signs points to added pressure to the market.

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