The S&P 500 will likely head back down toward its recent lows before the end of January where it will form a base, but it’s not time to buy the index yet, Chris Locke, MD of Oystertrade.com Management, told CNBC Wednesday.
“The long term is very clear, once consolidation is out of the way … we’ll probably be heading lower later this year, into 2010,” Locke said while taking a technical look at the S&P chart.
“I really don’t see the worst part of this mess that we’re in ending, as far as the indices are concerned, until well into 2010,” he added.
The S&P is working down to make a low, but it’s unclear whether that low will surpass the low seen in November 2008, Locke said.
The low is due “between now and January 28th,” he said.
Overall, the bear market still rules stocks and there could be further surprises to the downside, he added.
Gold is the “only reasonable investment this year, because it protects against global currency devaluation,” he said.
Watch the video above for the full CNBC interview with Chris Locke.