“Stocks may be due for a pullback, but it is unlikely they are headed into bear territory, says veteran stock watcher Sam Stovall.
Stovall, chief equity strategist at S&P Capital IQ, told Yahoo the key financial signposts he watches — those related to earnings, economic, monetary and sentiment factors — suggest only a modest decline ahead for now.
“We are a bit too complacent. We’re likely to see a shakeup. But I don’t think it’s going to turn into a bear market,” he predicted.
By Stovall’s reckoning, most historic market indicators are near their all-time averages, not tops. He said he watched data compiled over decades.
“We have had either a pullback or a correction on average every year since World War II,” Stovall told Yahoo, but he noted that in that time span, it has taken the stock market an average of only four months to get back to break even.
In Wall Street parlance, a pullback is generally regarded as a decline of 5 to 10 percent, a correction is a fall of 10 to 20 percent and a bear market occurs when stocks fall 20 percent or more.
Stovall suggested investors look for an attractive entry point with a pullback. “I often say it’s better to buy than it is to bail.”
He predicted that, sometime in 2013, the market may exceed the all-time high on the Standard & Poor’s 500 of 1,565 that was attained in 2007, but there may be several attempts first.
“Resistance levels on old highs are like rusty doors — they take several attempt before they finally break open,” Stovall said….”
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