A major American investor, who heads an investment company, expected that the main S&P500 index on Wall Street would decline by 43%, despite the statements made by Federal Reserve Chairman Jerome Powell, which gave A boost of enthusiasm for the markets during the past days.
Powell hinted at an increase in the federal interest rate by 50 basis points, compared to 75 basis points expected in December, but the founder and CEO of “Bull & Bear Profits” John Wolfenberger, played down the importance of these statements, saying that they are not new.
In an interview with Market Watch, Wolfenberger indicated that investors “may have gotten overly excited this week about Fed Chairman Jerome Powell’s comments.”
Wolfenberger believes, in his analysis of the performance of the US market, that it reached historical bullish levels and peaked in early 2022, and is still in a very bullish area so far.
He continued, “This bearish technical setup for the stock market, combined with an excessively bullish investor sentiment, indicates that we are likely to see another large bear market sell-off soon.”
Wolfenberger said the recession could start any day from now and end in late 2023 or early 2024.
Far from the more optimistic predictions seen in other halls of “Wall Street”, Wolfenberger expects a 43% decline in the “S&P 500” from current levels, despite the expectation of reaching a bottom in the middle of 2023.
He says this bear market will last for 18 months, which is not far from the 17-month bear market seen during the global financial crisis.