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The recent stock market plunge may have looked (and felt) bad…
But according to one of the most well-know banks in the United States, even after a day where the Dow lost 602 points, the worst is yet to come for this bear market.
And here's the only way you and your portfolio can come out on top…
"We remain bearish, as investor positioning does not yet signal 'The Big Low' in asset markets."
This is what Bank of America's chief investment strategist has to say regarding the recent market dip we faced. Currently, the Nasdaq tech barometer remains in correction territory.
On top of this, Wall Street strategist have been looking for signs that sellers are "exhausted" – indicating that the markets have reached a bottom. 44% of those who took the survey believe we'll see slow global growth over the next year, which happens to be the worst outlook since November 2008. On top of this, a net 54% see China slowing down, which is the highest level of pessimism in two years. Global earnings growth expectations are at their lowest levels since June 2012. And nearly one in three investors believe that the market has peaked.
And much of this can be attributed to the ongoing trade tariff war as it continues to add risk to putting money in the market. On top of this, many find themselves also worrying about the interest rate hikes from the Fed and the rising levels of corporate debt.
But Bank of America isn't the only one warning investors of the future to come…
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Goldman Sachs's bear market prediction tool is at an "elevated" level that has historically signaled a zero average return over the next 12 months and a "substantial" risk of drawdown.
Goldman's bear market indicator – which takes into account the unemployment rate, manufacturing data, core inflation, the term structure of the yield curve, and stock valuation based on the Shiller PE ratio – is at a rare 73%, its highest level since the late 1960s and early 1970s.
The indicator is "flashing red," wrote Goldman Chief Global Equity Strategist Peter Oppenheimer. "Historically, when the Indicator rises above 60%, it is a good signal to investors to turn cautious, or at the very least recognize that a correction followed by a rally is more likely to be followed by a bear market than when these indicators are low."
But despite the bearish sentiment circling the market, now could be the worst time to step away from the market.
And there's only one way to navigate the current bear market "war zone," and it's as simple as this…
About the Author
Tom Gentile is one of the world's foremost authorities on stock, futures and options trading.
With more than 25 years' experience trading stocks, futures, and options, Tom's style of trading systems and strategies are designed to help individual investors propel themselves past 99 percent of the trading crowd.