Bofa Says S&P 500 May Slide to 2011 Low: Technical Analysis

Tuesday, 27 Dec 2011 08:16 PM


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(Updates with closing prices in second and fourth paragraphs.)

Dec. 27 (Bloomberg) -- The Standard & Poor’s 500 Index probably will retreat to near its 2011 low, or about 15 percent, in the first half of next year before rallying in the second half, Bank of America Corp.’s Mary Ann Bartels said.

The benchmark gauge for U.S. stocks is likely to test the low of 1,074.77 it reached in October, said Bartels, the New York-based head of technical and market analysis at the firm, in an interview today on Bloomberg Television’s “Inside Track” with Scarlet Fu and Sara Eisen. If events related to Europe’s debt crisis continue to weigh on the market, the measure may fall as low as 934, she said. The S&P 500 advanced less than 0.1 percent to 1,265.43 today.

“Since August we’ve been in a base-building process,” Bartels said. “The first half of 2012 is going to be a rough go and the second half will be much more bullish.”

Concern that Europe’s sovereign debt crisis will drive the global economy into a recession pushed the S&P 500 down 19 percent between April 29 and Oct. 3. The index closed under 1,100 for the first time in more than a year on Oct. 3, falling below the price range that held since August and putting the gauge within 1 percent of a bear market. The measure is up 0.6 percent for the year, the smallest annual price change in 41 years.

The S&P 500 could rally to about 1,300 to 1,350, close to the high end of this year’s trading range, Bartels said. The index peaked at 1,370.58 on May 2. Investors with “very, very long-term” views, such as a span of one or two years, should be buying stocks today, she said.

Health-care companies, particularly pharmaceutical stocks, are equities with high-dividends that are still trading at “very attractive” price-earnings multiples, she said.

Technical analysts look at price charts to forecast resistance levels, or ceilings restricting further price increases, and support levels, or floors limiting declines.


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