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U.S. Stocks To Drop In 2013, Says UBS

The bull market that U.S. stocks have enjoyed since 2009 will finish in 2013,

The bull market that U.S. stocks have enjoyed since 2009 will finish in 2013, which will be followed by sharp drops in equities, according to analysts working for major financial services firm UBS AG.

S&P Could Plunge

Technical

The bull market that U.S. stocks have enjoyed since 2009 will finish in 2013, which will be followed by sharp drops in equities, according to analysts working for major financial services firm UBS AG.

S&P Could Plunge

Technical analysts working for the major financial services firm wrote in a report released earlier in the month predicted that when the bull market ends, the benchmark S&P 500 could plunge by as much as 30 percent by 2014, according to Bloomberg.

Michael Riesner and Marc Mueller, who are based in Zurich, predicted that the S&P could surge by as much as 7.4 percent to reach 1,570, which would bring the rally's index to 116 percent since March 2009, the news source reports.

Bear Market

The two analysts added that after the runup in the group of stocks, the S&P will suffer a "cyclical" bear market and plunged to as little as 1,100 by 2014. "The March 2009 cyclical bull market is moving into a mature stage and in this context, we see the S&P 500 and risk assets moving into a major top in 2013, followed by a new cyclical bear into 2014," the market experts wrote in the note," according to the media outlet.

Bearish Trend

The two analysts said that starting in 2000, the stock market started undertaking a series of predictable fluctuations - these consisted of a series of medium-term increases and decreases in value.

They said that the rally that has existed from 2009 to now is a part of this series of fluctuations, the news source reports. They indicated that according to their analysis, the robust bull market that stocks have enjoyed is set to change course and push these equities lower.

More Bearish Predictions

In addition to Riesner and Mueller predicting that the stock market will head in a bearish direction, Peter Lee, chief  technical analyst of UBS, recently made dire projections regarding equities during an interview with KingWorldNews.com.

He specifically said that "we are nearing a couple of inflection points coming up in the markets.  There is a distinct possibility that all of this converges in the upcoming two-year window between 2013 and 2014. This will be greatly impacting equities, bonds, and currency markets," the media outlet reports.

He also predicted that "we are about to enter this convergence period, and we suspect in the second half of this year and into 2014 we will see a great deal of major movements in these financial markets. The charts below go back to the Great Depression when we had an 85% drop in the S&P."

Lee said that while many global market participants believe that the end of the current bear trading market or "structural sideways trading market" is close, but predicted that this environment will not end for another five-to-eight years.

Return Of The Bull

Not all of the predictions made by these market experts were dire, as both Riesner and Mueller predicted that the slump in the S&P that will start in 2013 will end the greater bearish trend that began in 2011, according to Bloomberg. As a result, equities will begin a now and more bullish pattern starting in 2015.

The analysts wrote that U.S. stocks are "moving into the ultimate endgame of their structural bear market, which implies that the second half of the decade should be much more bullish for equities based on a new mega trend, which is selling bonds and commodities versus buying equities," the media outlet reports.

The market experts advised that investors purchase U.S. equities in November 2011, predicting rising values in the S&P 500, which appreciated 14 percent in a rally that lasted through April 2, 2012.

How are you preparing for the potential patterns that could manifest in the stock markets?

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