Charts: Stocks May Set New Lows in Mid-Year

The stock market is likely to test and reset bear market lows towards the middle of the year despite the S&P 500’s failed attempt at rallying since its lows last year in November, Chris Locke, the Managing Director at, told CNBC.

"In terms of cycles, the deepest point could be in 2010, and maybe not ending until 2011," Locke added.

The S&P 500 has tested the lows of last year but never broke them, moving mostly sideways. Investors are likely to take refuge in gold, Locke said.

He feels that gold is in the "first leg of a three wave upward movement." The third wave will be strongest, and have the most upside movement, even though there could be a pull back through the month of February, Locke said.

However, there is support between the $800 and $840 level. In Locke's opinion, "this would be the last chance to buy."

After a possible dip in the price, Locke feels that gold will rally and set new bear market highs toward the middle of the year.