Jim Paulsen Sees a Correction Coming | The 33 Charts That Turned Him Cautious

**Justin** (0:00)
Jim Paulsen has remained bullish throughout this rally, but his latest data is showing more reasons for concern. In the latest episode of The Jim Paulsen Show, Jim uses 33 charts to explain why he sees the potential for a correction, why tech may be most vulnerable, and why the longer term bull market may still remain intact. We are sharing this episode in the Excess Returns feed, but to receive future episodes, subscribe to The Jim Paulsen Show on your preferred podcast platform, using the links in the episode description.

**SPEAKER_2** (0:19)
Thank you for listening, we hope you enjoy the show.

**Justin** (0:24)
Jim, welcome back, thank you very much for joining us again this month. Nice to see you.

**Jim Paulsen** (0:28)
You bet, Justin, it's good to be here. I probably should appreciate you guys every month chatting a little bit.

**Justin** (0:34)
It's early July and it's pretty hot in most parts of the country weather-wise, maybe not so hot from a market and economic activity standpoint. I think that's what we're going to work through with you today. We have a number of slides you've given up to us graciously that you have put out on Paulsen Perspectives, which is your substack. We encourage people to go check it out. I think today you're building on where we left off last month and making the case a little bit more strongly that things don't look so great under the surface.
We're going to chunk it out in sections here. I think there's five or six, maybe even more sections that you've isolated that you're paying a lot of attention to. To start, I'll let you paint maybe a little bit broad picture, and then we'll get into some of the charts here.

**Jim Paulsen** (1:25)
Okay. That sounds good. Yeah.
I've been expecting for some time that we'd have a leadership shift that goes on from new era stocks to other areas of the market, which I've been referring to as broad marketplace. That has occurred here, but I think since the AI search from the March 30th low to the June 2nd top has put me over the edge a little bit.
I think that thing got frothy, and ever since then, it's been a little sucking up all the financial market information in the room, and it's all about AI, and it feels a little more like.com to me, and there's several things that have creeped up on the indicators I watch. So I kind of, you know, a week into June or so, so I've kind of gone on record of saying, I think there's going to be a correction here in the next several months. I think we might end up the year about where we have been at its highs, or maybe we won't make that up till early next year, but I kind of, my guess is, is that we're going to have a correction, there's a more between 10% to 20% that will feel ugly, can scare people, and I don't think it's going to be a bear market, primarily because I don't think we're going to have a recession, but I do think we're going to be worried about growth again, and we're going to be worried about a bear market. And the composition of that, if I had to guess, I'd think the tech stocks or near-air stocks, they go down more than 20
But a lot of the rest of it doesn't go down near as much. Maybe at clients 10 on average, we have something like a 15% or something. I don't know. You're talking about a 50-50 way between those two parts now, really. You know, it's interesting. Last night, I looked at S&P 500 technology sector. It's already off 10%, or is June hot?
You wouldn't know that because, now I'm not talking about the market, is it? But the S&P tech is, and you wouldn't know that just because of the excitement of AI. You know, it's pulled back off that ferocious high, and it's already at a 10% decline. So that's kind of where I'm at, and I've got some reasons for that, Justin, why I've kind of come to that conclusion. Again, I mean, I still think we're in a bowl that probably extends into 2030 or a little beyond. And so part of me even questions why I mess around with this, because who cares if it comes back? But it's big enough, if it goes over 10% in my mind, I think it makes a little sense to move a little at the margin. I'm not suggesting anyone to sell all their new era stocks. I'm not suggesting that at all. I'm not going to, no one else is going to time anything that great to do that. I am thinking, no, they may want to go to an underweight, to its market position of that and to move to an overweight in some of the broader market plays which we could talk a little bit about a little bit later. That's kind of where I'm heading.