My Crystal Ball Prediction - John Rothe | Portfolio Manager, Quant, Tech Geek, And Sometime Superhero To My Kids

My Crystal Ball Prediction

As a portfolio manager, I constantly get asked “Where do you see the market going?”. I often reply that I wish I had a magic crystal ball that predicts the stock market. Usually people laugh — and sometimes give me strange looks.

While I don’t have a crystal ball, I do have decades worth of market data and trends to draw from. (As well as the day-to-day market research that I follow closely.) With that knowledge as a base, here is my crystal ball prediction to start off the 4th quarter…

I have been closely watching the price level on the S&P 500. As the market is stuck in a sideways trading pattern, 1120 marks the floor of this pattern. The longer these sideways patterns go on for, the more “energy” is built up. When the pattern breaks, it will be a big move either down or up.

With the worries of a double dip recession in the US, a Greek default, and possible banking crisis in Europe, I believe the market will experience another breakdown. When it does, I think the S&P 500 will quickly fall another 10% to 1000. From here, I think it will bounce back up. October is historically a volatile month in which many market bottoms are reached.

Will this be a major market bottom, or a short term bottom? It’s tough to say. It will depend on whether Greece gets bailed out and if US economic numbers are stronger than expected. For now, we’ll be keeping a close watch on the 1120 area…

 

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