CHART OF THE DAY: What Happens To Stocks If Profits Don’t Collapse?

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The market is behaving as if a severe recession is in the offing.

But what if it isn’t?

What if this is all about a European panic that can be solved?

Citigroup has looked at what stocks typically do after a 20% correction that don’t see a subsequent earnings collapse.

Basically, stocks will rise, by at least 20% on average, over the coming 12 months.

It could even be as high as a 40% gain.

Again, this is assuming the economy doesn’t collapse. The latest data out today is not reassuring.

chart of the day, what stocks typically do after correction, aug 2011