Analysis of the Current Stocks: Insight from Hayes Martin

This ongoing bull market still has some way to go, but there is a possibility that stocks might experience a decline of up to 10% from their current levels. According to strategist Hayes Martin, investors should brace themselves for a more significant intermediate pullback.

Martin, who serves as the president of the advisory firm Market Extremes, offers both positive and negative insights for those invested in the stock market. On the downside, he predicts that the market’s decline, which commenced in late July to early August, could lead to a decrease of around 8% to 13% in the market averages. Notably, the S&P 500 has already faced losses in August. However, the silver lining in his analysis is that this impending decline is unlikely to mark the demise of the ongoing bull market and the initiation of a new bear market.

Renowned for his insights, Martin’s opinions hold weight in the financial world. His recent email, received on August 1st, indicated a shift in his perspective. He noted a deterioration in the market’s “internals,” signaling a potential change in the market’s trajectory. Although he does not anticipate a major downfall, he suggests preparing for a more substantial intermediate pullback and adopting a defensive approach.

Since receiving Martin’s email on August 1st, the S&P 500 has experienced a decline of 3%, while the Nasdaq Composite has seen a drop of 4.6% up until August 15th.

In a subsequent email, Martin elaborated on his stock analysis, projecting that the ongoing stock correction could lead to a decline within the range of 8% to 13%. However, despite this stocks correction, he highlighted that the market’s internals have not significantly deteriorated, which differentiates this situation from the severe stocks deterioration witnessed during previous bull-market peaks. Consequently, he remains optimistic that once this stock correction runs its course, the market’s upward stock momentum will resume.

When considering Martin’s analysis, it is valuable to reflect on his prior forecasts over the past year and a half. For instance, in early June of 2022, amid the bear market that had begun in January of the same year, he accurately predicted a countertrend rally with a potential 15% to 25% increase in the technology sector. The subsequent three months saw the Nasdaq Composite rise by 16.5%.

While the rally eventually subsided, and the bear market reasserted its presence by early October 2022, Martin predicted a robust “reflex bounce,” albeit not a new bull market. He estimated that the market averages could rise by 10% to 15%, with technology-dominated indexes potentially experiencing gains in the 15% to 20% range. Martin’s foresight proved accurate when the market hit its low on October 12th. Although he initially did not foresee a new bull market, his eventual turn towards a more bullish stance demonstrated his ability to anticipate strong rallies.