History Says Bear Market Ends in October with S&P 500 at 3020 – BofA’s Hartnett

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Forget about inflation dropping below 4%-5% anytime soon as inflation shock “ain’t over”, warns Bank of America Chief Investment Strategist Michael Hartnett.

In response, both Fed funds and U.S. yields are likely heading to 4%-5% in the next 4-5 months, which should translate into new lows in stocks.

Hartnett also reminds the bank’s clients that the S&P 500 is in the 20th bear market in the past 140 years with an average peak to trough decline of 37.3% over 289 days.

“History no guide to future but history says bear market ends Oct 19th 2022 (35th anniversary Black Monday) with S&P 500 at 3020 (note Nasdaq already down -29%),” Hartnett added.

The next leg lower could be initiated by the EPS recession shock with the guidance pull from FedEx (NYSE:FDX) yesterday asking serious questions about the state of economy.

On where to buy S&P 500, Hartnett says “nibble at SPX 3600, bite at 3300, gorge at 3000.”

As far as flows in the week to Wednesday are concerned, inflow to equities was $6.2 billion, while gold, bonds, and cash saw outflows.