JPMorgan's top chartist says the S&P 500 to tumble all the way back to 3,500, retesting bear lows

Published Mon, Dec 4 20239:31 AM EST

JPMorgan head of technical strategy Jason Hunter said the S & P 500 in 2024 is in for a stark reversal back toward its bear lows. "Stocks should pull back, [and] in my base case on the technical side, the S & P 500 is gonna drop to 3,500," Hunter told CNBC's " Squawk Box " on Monday. That move represents a roughly 20% pullback from the benchmark's current level. Hunter pinned his bearish outlook for the S & P 500 to a looming recession risk that could come to fruition despite a soft landing and hinder stock prices as a result. .SPX YTD mountain The S & P 500 has ticked up roughly 20% from the start of the year. "When you look at the timing since curve inversion, and go back into the 1960s and take yield curves that go back that far, as we move into next year, as that window continues to progress, you tend to find your way into a bear market that's eventually associated with a recession way more often than not," Hunter said. "The odds are stacked in favor of a hard landing." And because markets are pricing in the expectation that the Federal Reserve will cut interest rates in 2024, such a scenario suggests a weaker stock market, he said. Hunter's forecast is in stark contrast with more recent market moves, which saw the S & P 500 reach its highest close for the year on Friday. It also would erase essentially all of the gains the benchmark has made since the start of the year. Hunter added that while a year-end rally will continue into the end of 2023, signs of market deceleration are already appearing and underpin his base case for the benchmark. "[The rally could last] maybe a little bit longer, but it's already starting to decelerate to the point where our algorithmic base signalings are already starting to show that you should be lightening up positions and starting to hedge at this point already," he said. Hunter's comments are in line with a previous market forecast from a Nov. 21 research note, where he said he had expected the downturn to materialize in 2023. However, "a more resilient economy short circuited the view and effectively kicked the risk-off can down the road." Hunter also noted that the index could return to growth in 2025, which could turn out to be "a positive year" if the Federal Reserve eases interest rates in 2024.