Expect the positive market performance to give it all back

Biderman on why to expect a correction soon.

In 2010 the S&P 500 rose almost 5% the first three months of that year and then popped an additional 3% in April before topping out the second trading day of May. Then the S&P 500 dropped 13% by the August 2010 low.

Similarly 2011 mirrored 2010 as the S&P 500 rose a bit over 5% the first three months of that year and climbed an additional 3% in April 2011 as it did in April 2010. Then starting the first trading of May, the S&P plunged 18% by the August 2011 low.

In other words, the stock market in 2011 mimicked a similar trading pattern to what happened in 2010 for the entire year. And I would not be surprised if 2012 is the third year in a year that the stock market rises the first four months of the year before plunging over the next few months.

Why has the stock market risen the first part of each of the past three years? The answer is simple. The Fed has front loaded money printing each year, QE1 in 2010, QE2 in 2011 and Operation Twist this year.

Full video below.