(Bloomberg) -- U.S. stocks are two-thirds of the way through a “structural bear market” and will take at least four years to surpass their record levels of October 2007, technical analyst Louise Yamada said. The stock market is likely to alternate between cyclical, or shorter-term, bull and bear markets over that period, Yamada, managing director of Louise Yamada Technical Research Advisors LLC in New York, said in a Bloomberg Radio interview. A bull market is commonly defined as a 20 percent rally from a low, and a bear market is started by a 20 percent drop from a high.
“The profile of the next four years is about eight cyclical moves,” Yamada said. The Standard & Poor’s 500 Index’s 12-year low in March “may well prove to be the pivot low, but that doesn’t mean we’re going to be roaring off in a new bull market yet. There’s a lot of repair that has to take place following that kind of a decline.”
The main benchmark for American equities fell 57 percent from its all-time high in October 2007 through March 9 as the collapse of the subprime mortgage market froze credit and sparked the first global recession since World War II. The index has rebounded 55 percent since, leaving it 49 percent below its peak, on signs the contraction may be ending.The U.S. dollar, which traded at a 13-month low against a basket of six major currencies including the euro and the yen this week, will continue to decline, Yamada said.“We don’t have great hope for the dollar in the long term,” she said. “Growth driven by high levels of business investment leads to currency strength, but growth driven by strong consumption and government spending, which is what we’re doing here in the U.S. now, leads to currency weakness, and somewhere that has to be reversed.”
Yamada founded her company in 2005 after Citigroup Inc. eliminated its technical research department, which she headed.
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