Pros Say: 5-10% Rally in the Next 45 Days

By: JeeYeon Park
News Associate

Stocks jumped Friday, sealing a four-session winning streak, after a sharp jump in existing-home sales and some encouraging economic data out of Europe. In the meantime, Federal Reserve chairman Ben Bernanke said the economy is on the mend but recovery is likely to be sluggish and risks still remain. Read and listen to what the experts had to say...

5-10% Rally in the Next 45 Days
"After you come out of calamities, the market will tend to lose all its sellers and work its way higher over a prolonged period," said Charles Lemonides of ValueWorks. "We’re just at the very biggest stages of that," he said. He said this is a good time to buy the dips and that volume will return in September. He expects a 5 to 10 percent rally in the next 45 days and said the markets should be back to pre-Lehman levels in six months.

Low Market Volumes Bring Volatility
Stocks can be highly volatile during low-volume periods such as the summer and can rally higher or sink lower depending on the news flow, said Steven Mayne of Falcon Securities. “What’s important is that during the light volume months, with any bit of bad news, the markets can suddenly plummet.”

Liquidity to Boost Economy
"The central bankers have said they are going to keep on pushing liquidity and money out into the economy and that's actually good for growth prospects and asset prices," said Giles Keating from Credit Suisse. He said March to June was a recovery trade from the distressed levels and the economic recovery is starting to come through.

Recovery Remains Uncertain
"The brutal truth is no one really knows how strong this recovery is going to be," said Richard Cookson of HSBC when considering the outlook for the global economy. “And therefore people are looking for any signs that they can find…And that’s the problem.”


Private Sector Solution Needed for Health Care
Sen. Tom Coburn (R-Okla.) said many people are worried about the outcome of the health care reform. “They don’t buy that the federal government needs to spend more money and needs to be in control of health care and there’s got to be a private sector solution.”