Markets may see year-end bounce: Schaeffer's Investment

In an interview on CNBC-TV18, Ryan Detrick, Schaeffer’s Investment says the US markets rallied sharply last week. "We had a good rally last week. It looks like we are trying to carve out a bottom," he adds.

According to him, the markets are getting into historically bullish timeframe. "December, for the last 20 years, has been the strongest month, about 2 percent on an average. So, they all say it is Santa Claus rally. With the historical seasonality, we are looking for a potential year-end bounce here. But we need some type of a good news. It has probably come from fiscal cliff or Greece area," he elaborates. Also read: Euro zone, IMF reach deal on long-term Greek debt Below is the edited transcript of his interview on CNBC-TV18. Q: How are you reading the market? There is some amount of caution, especially with the European situation. A: Last week, we had a very nice rally. The Dow was up 3.35 percent for the week. It was actually one of the fourth best weeks, ever since 1950, the fourth best week. So, we had a good rally last week. It looks like we are trying to carve out a bottom. Yesterday we have taken a step back. S&P had a resistance at the 1,420 level earlier this year and support later this year. So, big bounce, logical area of resistance and now it has taken time here, consolidating and maybe form back a little bit. Q: Some people were hoping for a post Thanksgiving rally. Now that didn’t happen, the fiscal cliff worry is still there. But, going ahead, you are expecting GDP data this week. What kind of levels are you working with? What are your expectations? A: This week, we just look at the economic data like GDP, some jobs numbers and housing numbers. So, it is a pretty light week. We are all just getting into historically bullish timeframe. December, for the last 20 years, has been the strongest month, about 2 percent on an average. So, they all say it is Santa Claus rally. When we look at the world, based on expectations, Schaeffer’s has got an extremely bearish from a contrarian point of view like any positive is any good news whatsoever. With the historical seasonality, we are looking for a potential year-end bounce here. But we need some type of a good news. It has probably come from fiscal cliff or Greece area. We haven’t got that yet. But there is a lot of negativity there. It can't be a good sign. We just need something to spark it. Q: Is it likely that the mood on the street regarding the fiscal cliff is turning maybe a bit more positive? Would you say the mood is a bit more positive on that issue? A: I think so. I think a little more optimism is creeping in. Something can have been globally done. But again we compare now to last year. Last year, we were talking about a potential global recession, how Greece is going to lead us down and they are going to get bankrupt now. A year later, it is stuck at the same Greece issues. Now, we are concerned with the fiscal cliff. We think fiscal cliff very well could be a blown out portion. This market continues to scare itself. We go higher and we scare ourselves a pull back. We think once again we are scaring ourselves. Is it a concern? Absolutely. Is it as major end all? We don’t think so. Potentially, we look back and realise that the recent 9 percent correction was actually pretty good time to buy and accumulate shares for historically bullish time frames like we just talked about.