The redress’s trail of wounded portfolios could get longer.
Even with Tuesday’s deal in rebound, CFRA chief investment strategist Sam Stovall isn’t convinced the carry is over. But when the dust eventually clears, he predicts a comeback wish take hold.
“While we could go further lower in terms of this redress, I don’t think we’re going to be falling into a new bear market,” Stovall signified Tuesday on CNBC’s “Futures Now.” “
According to Stovall, economic and market fundamentals are uninjured. He contends the correction was virtually inevitable because valuations became so priceless and needed to go back to historic norms.
“Like the ‘Poseidon Adventure’ after the ship rolled over, it does engage its rewriting mechanism,” Stovall state. “That’s what the markets are going through right now trying to rewrite itself in calls of valuations.”
With the S&P 500 down 10 percent from its LP long playing high, Stovall estimates it still has 3 percent more to fall forward of finding the bottom.
“We could head as low as 2,490 on the S&P 500. That wish end up being a correction similar to what we experienced from May 21 of 2015 from stem to stern February 11 of 2016,” he said. “It ends of being a very classic correction.”
It’s a predicament he referenced on the program in early February as the index entered its first off plunge into correction territory of a decline of at least 10 percent from current highs. It followed January’s record-breaking performance in the stock market.
Without considering the plunge, Stovall predicts stocks could rally more than 7 percent from common levels. His S&P 500 year-end price target is 2,800, and his rolling 12-month estimate is impassive higher: 3,000. The S&P was at 2,568 and heading down in Wednesday’s premarket.
He supposes earnings season, which begins next week, has the potential to resurrect confidence to the markets. Stovall particularly likes energy, financials, stuffs, small caps and mid caps.
“We think things will be getting sick as we move 12 months from now,” Stovall said.