I am on the road today tend­ing to a few busi­ness mat­ters — in an envi­ron­ment in which South Africa has just seen its third con­sec­u­tive quar­ter of neg­a­tive GDP growth — and the mood is not entirely upbeat.

Back to the yin and yang of equi­ties: I have tried argu­ing over the past week or two that global stock mar­kets were grossly over­bought and out of kil­ter with eco­nomic real­ity, and there­fore ripe for cor­rec­tion — a process I believe has now com­menced (also for com­modi­ties, and the reverse for safe-haven assets such as gov­ern­ment bonds, the US dol­lar and the Japan­ese yen). I have also men­tioned that we may see at least some degree of rever­sion to the 200-day mov­ing aver­ages in a num­ber of instances.

It is per­haps pre­ma­ture to say whether we will be deal­ing with a nor­mal short-term cor­rec­tion or a more sig­nif­i­cant move threat­en­ing the pri­mary trend. How­ever, when con­sid­er­ing longer-term data, it would seem that any cor­rec­tion may still be part of an over­all bottoming-out process. The chart below shows monthly inter­vals for the S&P 500 Index since 1998 and con­veys an impor­tant mes­sage when con­sid­er­ing the three momentum-type oscil­la­tors at the bot­tom (RSI, MACD and ROC). These are revers­ing course for the first time since the pri­mary sell sig­nals of 2007 and now either indi­cate buy sig­nals (or are get­ting close to them in the case of MACD).

Source: StockCharts.com

I need to be off to my appoint­ments, but thought I would just share this thought with you while we remain cau­tious and await Mr Mar­ket to offer us stocks — espe­cially in high-growth mar­kets such as China, India and resource-based economies — at more real­is­tic levels.

Dr. Prieur du Plessis is an investment professional with 26 years' experience in investment research and portfolio management. More than 1,200 of his articles on investment-related topics have been published in various regular newspaper, journal and Internet columns, including his blog, Investment Postcards from Cape Town. He has also published a book, Financial Basics: Investment. Prieur is Chairman and principal shareholder of South African-based Plexus Asset Management, which he founded in 1995. The group conducts investment management, investment consulting, private equity and real estate activities in South Africa and a number of foreign countries. He also serves as Honorary Consul of Slovenia for South Africa, actively developing economic, cultural and scientific relations between Slovenia and South Africa. Prieur is 54 years old and live with his wife, television producer and presenter Isabel Verwey, and two children in Cape Town, South Africa. His leisure activities include long-distance running, traveling, reading, motor-cycling and scripophily. Read more from the author/contributor here.

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