Are stocks headed for a 20% drop?
BofA technical analyst doesn't put much hope in a Santa Claus rally.
Mary Ann Bartels, head of technical analysis at Bank of America Merrill Lynch, warned investors Monday that the Standard & Poor’s 500 index fell below its 50-day moving average last week and is now about to start testing the lows last seen in October, around 1,074 to 1,100.
Bertels gives even odds that those levels might not hold either, and that the S&P 500 might fall further, potentially dipping as low as 935 to 985. The index lost 1.2% on Monday to close at 1,205.35, but Bartels' forecast lows would mean a drop of another 22.5%.
So much for any hope of a Santa Claus rally. But Bartels isn't painting a portrait of unrelieved gloom. Market breadth -- another measure of the overall market’s direction, which Bartels captures by using a 10-day moving average of the new 52-week highs minus the new 52-week lows on the New York Stock Exchange -- is volatile but positive. And if investors can just hold on, she promises that "a new cyclical bull market" will take shape sometime next spring, during the second quarter of 2012.
Still, if you’re looking for alternatives to stocks, Bartels doesn’t offer much hope. Commodity price charts signal big drops ahead, she says, thanks in part to what she expects to be a period of significant underperformance by emerging markets. European large-cap stocks are laboring under a cloud (an Ichimoku cloud, to be precise, for those who monitor such technical concepts). Bond investors might be pleased if her predictions come true and prices edge higher, but those counting on fixed income investments to generate yields won’t be too thrilled. (The higher a bond’s price moves, the more its yield declines.)
Bartels did find at least one stock, in a surprising sector, that might be worth a look. Interestingly, on the day that her own employer, Bank of America (BAC), fell below $5 a share for the first time since March 2009 (it closed at $4.99), Bartels pointed to financial stocks as "the trouble spot for the market," a sector for which bullish technical indicators remain elusive. Yet Bank of America’s own stock, she says, is approaching territory where it can be described as "near oversold." Even there, "near" might be the key word.
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"head of technical analysis at Bank of America Merrill Lynch"
This is a joke isn't it?
What was she predicting in September 2008 ?
And "even odds" is the equivalet of flipping a coin.
Merrill....they managed to lose most all of my retirement. I depended on them to make the right moves for me. After all I was paying them for their expertise...I wasn't all that market savvy, at any rate this clown isn't any brighter or hasn't any more insight than my dog.
Here are my predictions, the market is going to go up...the market is going to go down...the market is going to trade sideways...one of these should work this year, and all of you can come back next year and sing my praise's.
a drop?? I'm shocked!!! all the talking heads and "experts" that write here say "happy days are here again"......
what recession...luxury goods are booming......
article on the side on this one........
the rich say alls well also........
but they gotta layoff a few people first......
The EU is going to practice quantitative easing just like the US has for he last 24 months. It's already started with the EU giving 3 year low interest loans to banks that are using sovereign debt as collateral. The bond boys and hedge funds love FUD and volatility so they can short and then cover. It's been working since last May be I think it's going to take a rest for a couple of months.
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Here's a list of ways to profit from the potential move from defensive to cyclical stocks.
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