The recent sharp pullback and volatility in global equity markets is not yet over, according to the chief executive of financial advisory firm Longview Economics, who said that market models show a "third wave" of the market correction is coming.
"The idea that it's all done in one sell-off is, I think, probably a triumph of hope over reality," Chris Watling told CNBC Wednesday.
Instead, Watling said that market analysis and history showed that sell-offs "tend to happen in three waves," explaining the typical pattern of these:
"You get your vicious first wave sell-off that we had with the high on January 26 in the U.S., then you get your typical wave two relief rally which we had last week when the S&P was up 6 percent, the best weekly performance since 2011, then you tend to get a third wave to either new lows or testing the lows from the first wave of the sell-off."
Watling's comments come as investors still appear cautious after the recent sell-off, that saw indexes around the world plummet amid fears of rising interest rates and higher inflation, which traditionally make equities less attractive. Markets will be keeping a watchful eye on the latest minutes from the U.S. Federal Reserve, due Wednesday, for insight into the bank's outlook on those metrics.