While the bear market for stocks is over, a correction is in store for them after their recent torrid advance, says superstar investment strategist Laszlo Birinyi.
The Standard & Poor’s 500 Index has soared 26 percent from its March 6 low of 667.
“It’s time for a pullback,” Birinyi tells Bloomberg TV. “By almost every measure of an overbought market, it has done a remarkable job of trading through those measures.”
As a result, he says, “We’re looking for some consolidation. It can be a consolidation of time where the market just treads water for some time.”
He has a colorful description for the danger of purchasing more equities now.
Buying stocks is like crossing Fifth Avenue when the light is red,” Birinyi says. “You might make it, but the odds are not with you.”
And how far might the market decline? “I would guess — and it’s only a guess — there will probably be a 5 to 10 percent pullback,” he says. “But again it could be a pullback in time, where we do nothing for a while and digest these gains.”
Still, Birinyi says, “I think the market has made a bottom. But in the markets of today where you have so much volatility, you have to be more sensitive to timing.”
Investment guru Marc Faber has the same view as Birinyi. He expects a short-term correction and then a move up by the S&P 500 to 1,000 by July.
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