John Hussman: Market Correction 80% Probability

John Hussman:

It's important to recognize that when I quote probabilities, I am generally using a form of Bayes' Rule. So when I say, for example, that I estimate a probability of about 80% of fresh credit difficulties accompanied by a market plunge over the coming year, that figure is based on various combinations of historical evidence, and what has (and has not) happened afterward, and how often. As a side note, a “market plunge” in this context need not be a “crash.” In the context of a credit-driven crash and rebound (which is what I believe we've observed), a typical post-rebound correction would be about -28%, but even that would take stocks to less than 20% above the March lows.

Grains Just Keep Moving Higher

Corn, wheat, and soybeans prices continue to move still higher. Corn and soybeans prices have already reached new price highs this evening, with soybeans more than 20 cents higher, and wheat having moved more than 40 cents higher. This is significant, since the daily lock limit for wheat is only 60 cents for the entire day, and wheat has already moved 2/3 of that amount is the opening minutes during this evening's trading!

I must admit that with grains prices having reached such stratospheric levels, I am beginning to feel that at some level, a correction or sell-off is due, even if only for profit-taking purposes. How much longer can grains prices continue moving higher unabated at such a rapid rate? I don't know! However, I'll be ready when they do!

Corn
Wheat
Soybeans