A year-end rally for the S&P 500 is highly unlikely, unless the index gets back above 840 this week, so investing in government bonds looks better, Robin Griffiths, technical strategist at Cazenove Capital, told CNBC.
"The data has simply deteriorated at such an incredibly rapid rate that my year-end rally, which is normally a good bet, is going to get overridden by the weight of bad news," Griffiths told CNBC.
The S&P 500 could fall another 200 points during an extended period of sideways trading, Joel Stainton, technical analyst from SEB Future Sales, also told CNBC.
The index closed below the technically important level of 800 last week, marking multi-year lows along with the other major US stock indexes. Analyst opinion is divided as to whether the lows mark a turnaround for stocks, or just a pit-stop on the way lower.
The coming months will bring "much more horizontal trading with 600 (points) as the ultimate target," Stainton said.
In the bond market, investors are discounting a depression, while in equity markets they're only discounting a bad recession, according to Griffiths, who said "bonds are looking better than equities just at the moment."
In the current deflationary era, investors have gone back to the risk-free investment in government bonds and stocks have now become "incredibly risky," he said, adding that because of this their returns should be higher from the company's dividend.
If you want stocks, you want "unimpeachably good-quality equities", as one of the things you are going to get is "dividend coupons," Griffiths explained.
In the coming few months, Griffiths expects oil to go back up to $80 a barrel again, noting that the commodity's downtrend is over.
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