Tags: Sine | S&P | 500 | 1330

Drexel Hamilton’s Sine: S&P 500 Will Likely Hit 1,330 Next Year

Monday, 31 Dec 2012 07:47 AM

By Dan Weil

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A weak economy and technical factors should lead to a tumble for stocks next year, says Barry Sine, research director for brokerage firm Drexel Hamilton.

On the technical side, stocks move in four-year cycles, he tells CNBC. The first and second years of a presidential term usually are negative for stocks. That obviously doesn’t bode well for equities next year.

"Most of the strategists out there that I look at are pretty bullish," Sine says. "We're taking a contrarian view. We think you're going to get a bit of a correction."

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

Indeed, he foresees a 38.2 percent correction of the stock market rally that prevailed from October 2011 to October 2012, with the Standard & Poor’s 500 reaching 1,330 in 2013. The figure comes from a Fibonacci retracement analysis – a method for predicting market moves based on chart patterns.

On the fundamental side, “the overall economy isn’t going to look that great” next year, with consumer sentiment negative and the positive impact of the 2009 fiscal stimulus package over, Sine says.

As he noted, many market participants don’t share his bearishness toward stocks.

Savita Subramanian, a strategist at Bank of America, sees the S&P 500 hitting 1,600 next year. "Today's depressed valuations and bearish sentiment are laying the groundwork for the next secular bull market in equities," she wrote in a commentary obtained by CNBC.

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

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