'The market is built on a bedrock of total complacency': A former top TD Ameritrade technical analyst says stocks will fall another 20% this year as investors begin to realize a Fed pivot isn't in the cards for 2023
Bierman believes investors are too hopeful for a Fed pivot in 2023.The more inflation falls, the more hope investors have that a Federal Reserve pivot to dovish policy will come. Bureau of Labor Statistics reported that prices rose 6.5% year-over-year in DecemberBut according to Jeff Bierman, the chief market technician at TheoTrade who held the same position at TD Ameritrade between 2007-2015, investors shouldn't be betting on a shift to dovish policy in 2023.
"Inflation goes up like a volcano and comes down like a feather," Bierman said."It's going to take a while to reset inflation lower."This hawkish policy will eventually lead to a recession this year, Bierman said, a. An economic downturn will mean earnings estimates will have to come down, he said, which will be bad news for stocks.
But in addition to fundamentals, technical indicators are showing the market is due for another sell-off, according to Bierman. , also know as the VIX, which gauges expectations for volatility in the S&P 500. Bierman believes the S&P 500 will bottom out around 3,200-3,250. A bottom of 3,200 would represent 20% downside from the index's current level of 3,999. Bierman's recession call has become a somewhat consensus view on Wall Street.
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