It's déjà vu all over again for the markets, according to one top trader.
Darren Wolfberg, Head of Cash Equity Trading at BNP Paribas, says the benchmark S&P 500 index is repeating the same moves it did four years ago. Granted, four years ago, the S&P 500 was nearly 700 points lower than it is today. However, Wolfberg believes the chart patterns are now making the same moves it did back then.
Wolfberg's charts show a test of the 150-day moving average in late summer of 2009, followed by a 266-point rise in the S&P 500 from its trough over the next six months. After that, there was another test of the 150-day. Likewise, in recent months, the index had a 258-point gain after its June 2013 test of the 150-day. It once more tested the 150-day with the current selloff. The 150-day moving average is now around 1,737.
Wolfberg expects the correction won't be as severe as others anticipate.
"When everyone's looking for a 10% correction – and, I think you've probably heard that from a gazillion commentators right now – you're not going to get 10%," says Wolfberg. "You're probably going to get somewhere between 7% [and] 8%."
After that point, the market will move up substantially higher, forecasts Wolfberg.
"I think we're going to be higher than 20% to 30% higher two to three years from now," says Wolfberg. "We could probably be 15% higher from where we are right now by the end of April. And then, towards the end of the year, I think you're going to have a summer selloff. But, I think we'll ultimately be higher than the highs… in April."
To see Wolfberg's full discussion on his charts, watch the video above.
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