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Is The Market Headed for A Sharknado?

Talking Numbers

What’s worse than sharks falling out of the sky? How about being long the market and watching the S&P 500 fall from its heights?

What’s worse than sharks falling out of the sky? How about being long the market and watching the S&P 500 fall from its heights?

It’s a possibility, warns CNBC contributor Abigail Doolittle, Technical Strategist at The Seaport Group. She means, of course, the part about the market falling. Skydiving sharks are a different matter.

This is one of the most important weeks this quarter for the market. Some of the biggest names are reporting this week: Citigroup, Goldman Sachs, Microsoft, GE, Bank of America, and UnitedHealth among others.

Should one of these major companies disappoint, the market drop may be of such calamitous proportion that it will require Ian Ziering and Tara Reid to shoot a sequel, this time about stocks falling wantonly from above (“Stocknado!”).

However, according to John Stephenson, senior vice president and portfolio manager at First Asset Investment Management, like Syfy viewers last Thursday, the market is already expecting something bad. [Disclosure: Syfy is owned by Comcast, CNBC’s parent company.]

“If you look at where we’re at right now, it’s overwhelmingly pessimistic going into this quarter,” says Stephenson. “Typically, when you are in that situation where you’re running three times the normal level of pessimism… it tends to lead to upside surprises, not downside surprises. I think the market’s expecting weak earnings and that’s why I’m saying buy on weakness.”

So, should you stay cautious or should you jump into the markets?

Watch the video above to hear Doolittle and Stephenson analyze this week in the S&P 500.

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