Charts Predict: S&P to Rally 15%; Better Odds than Vegas
The S&P 500 will rally 15 percent in the next few days and has a better risk/reward ratio than you'll find in most casinos, Edward Loef, technical analyst from Theodoor Gilissen Bankiers, told CNBC.
"The selling pressure is gone so I'm now looking for an upside break out," Loef said.
"I think we will see a nice rally in the next few days, I expect a 15 percent rally in the S&P 500," he added.
The S&P's lows of 2003 are acting as a bottom for the index, Loef said.
Video: watch the full interview with Edward Loef
The relative strength index, a technical momentum indicator which tries to determine whether a stock or index is oversold or not, is showing a positive divergence and an area of support for the S&P 500, Loef said.
"The reward to risk ratio of 2.5:1 and I think that's a better ratio than you get at a casino, so I think you should buy right now," he added.
A risk/reward ratio tries to determine whether a bet is worth the risk by comparing the expected returns with the amount of risk.
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