The S&P is about to fall to 1,670, strategist warns

The S&P 500 has staged an impressive rebound from its memorable mid-February low of 1,810, but the market is about to give back all of those gains and then some, according to investment strategist Larry McDonald.

"We're going to have a very, very tough run in the next six months," McDonald, global head of macro strategy at ACG Analytics and formerly Societe Generale, predicted Thursday on CNBC's "Trading Nation."

As McDonald sees it, the market is essentially in a lose-lose position going into the June Federal Reserve meeting, out of which some expect the central bank to announce a second rate rise.

"If they try to hike in June, the dollar's going to rip, oil's going to get slammed, emerging markets are going to get slammed and once again we're going to go risk-off," he said.

If, on the other hand, the Fed doesn't increase rates, "then bad assets, bad loans, more ugly credit formation keeps building. And either way," stocks are set to drop.

Just how far will equities fall?

"I think we're going to break 1,700," and get to "1,670 on the S&P before the end of the year or before first quarter next year," which would be a 20 percent decline from Friday's opening price, he said.

Only time, of course, can tell whether this prediction will come true.

If it does, "that would be a very attractive buy," Eddy Elfenbein of the Crossing Wall Street blog said Thursday, adding, "But I wouldn't be waiting to get to that level."

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more

Connect