"The DJTA is in a clear long-term downtrend. My next target is the low of 6 years ago which is around 2,000," he added. This would mean a further decline of 20 percent.
"The best we can hope for in the short term is a pull back to the 3,000 level," Loef said. However, he doubts that level will be reached because of the trend in the DJIA.
"There has been a pattern of lower highs, indicating selling pressure," he said. Loef feels that the next support is at the 6,000 level, and advises investors to buy some protection.
"As long as the DJIA remains below 7,500 the risk for a final sell off is near," he said.
For the Investor:
There is an almost exact replica of the previous two charts when it comes to the DJ Stoxx 600.
"The best that can be hoped for in the short-term is some kind of pull back to the November lows, followed by a wave of selling to complete this bear market cycle for the year," he added.
"There is short-term risk, but long-term opportunity for 2010," concluded Loef.
- Watch the full interview with Edward Loef above.