"It would be good to cleanse the bowels of the system right now, rather than keep hanging on," he explained. "Until we get a flushing of the system, people are going to be very, very concerned."
Schatz pointed to ongoing concerns over Europe's debtcrisis. The threat of a Greek default persists, which some market and economic pros postulate could trigger another Lehman-like crisis for global financial markets.
At the moment, U.S. markets are "hanging on" to every word on Europe, Schatz said.
"It's not healthy. At some point, you're going to need some kind of resolution to get the system flowing again," he said.
Thus, the best case scenario for the stock market, is one "quick shot down," and then a reversal in mid-October, Schatz went on to say.
"The market is going to bottom in October — and I think we'll have a strong rally in November, December," he said.
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Disclosures:
Disclosure information was not available for Paul Schatz or his company.