Tags: Dwyer | correction | stock | bull

CNBC: Wall Street's Most Bullish Strategist Dwyer Expects Stock Correction

By    |   Wednesday, 25 June 2014 09:26 AM

Canaccord Genuity chief equity strategist Tony Dwyer has the most bullish year-end forecast on Wall Street, predicting the S&P 500 will hit 2,185, according to CNBC.

That represents a 12 percent increase from Wednesday's close of 1,959.53.

But Dwyer isn't so enthusiastic about the short term. He sees the market enduring a 5 percent-10 percent correction before rising again.

Editor’s Note:
New Warning - Stocks on Verge of Major Collapse

"The fundamental backdrop is terrific," he tells CNBC. "I just think the market is too extended and typically, at this point, it should pull back."

The S&P 500 has gone 32 months without a 10 percent correction, compared to a post-1946 average of about 18 months between 10 percent declines.

So what will cause the correction this time around?

"When the market gets very tired and it gets extended, you don't know what's going to cause it, but it comes in," Dwyer notes. "And I think that's what we're set up for."

The S&P 500 had a trailing price-earnings ratio of 19.3 as of Friday, according to Birinyi Associates.

Dwyer believes the correction will offset out any gains if you purchase now and the market still goes higher.

"In the first six months of a new Fed chair, the market pulls back a median 9 percent. When the market's up this long over the 200-day moving average, before you get another 5 percent, you typically get a 7 percent correction, so there's a lot of different quantitative historical nuances that command staying with a correction call, even if it's against you right now."

Not everyone is looking for a quick correction in stocks. "Very quiet periods, like overbought conditions, can often last much longer than we think possible," Frank Cappelleri, a sales trader at brokerage firm Instinet, tells The Wall Street Journal.

"The good news is that narrow ranges and light volume typically accompany a rising market, which, of course, has been the case over the last few weeks. We know that this can't last into perpetuity, but until it changes, there is no use in stepping in front of it."

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

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InvestingAnalysis
Canaccord Genuity chief equity strategist Tony Dwyer has the most bullish year-end forecast on Wall Street, predicting the S&P 500 will hit 2,185, according to CNBC.
Dwyer, correction, stock, bull
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2014-26-25
Wednesday, 25 June 2014 09:26 AM
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