Bob Doll updates his 10 predictions for 2022

Bob Doll, chief investment officer of faith-based firm Crossmark Global Investments, entered 2022 predicting a tougher year for the stock market, with more frequent pullbacks and higher volatility. There is no doubt that this general forecast has proven to be correct so far.

Doll also made 10 specific predictions for the year and recently released a mid-year update, noting that four of his predictions seem to be heading in the right direction but that it’s too early or too close to know how the other six will land.

Discussing his mid-year update and views in a webcast on Wednesday, Doll also touched on the developments of the past few days and said the latest stock market rally offers signs that the bear market may soon take hold. end.

“This is the first rally we’ve seen that shows promise and possibility that we’re preparing for the end of the bear market. I’m not asking for that, but the odds for the first time are higher now,” Doll said. , noting that four prior rallies in the current bear market have led the S&P 500 to gain 7% to 13%.

The rally started on Friday, and Tuesday in particular “was a very strong day. There were real buys, there were real short hedges,” he said, offering several reasons for the brighter market outlook.

“We saw [Tuesday] 10 to 1 volume up and down, this is the first day over 90% since the start of this bear market,” Doll said. “We also saw an outperformance of Consumer Discretionary versus Consumer Staples. It’s unusual in these rallies. We’ve seen defensive stocks lag behind cyclical stocks, and that’s another good sign.

The rally was also due to a significantly oversold market, he noted. It also follows recent fears that the Federal Reserve will raise the benchmark interest rate by 100 basis points later this month, when it is now fairly clear that rates will only rise by 75 basis points, he added.

Significantly, consumers’ long-term inflation expectations have recently declined and “earnings are less bad than expected”.

Doll is not convinced, however, that the market has yet seen the bottom rather than a series of lows and cited several features that would signal the actual bottom, including greater visibility on Fed tightening, evidence that ” earnings story” will hold and “classic capitulation”, with the VIX index climbing above 40.

“We are more likely to have a bull stock market in the second half than in the first half,” with continued volatility in both directions, he predicted on Wednesday.

The 10 slides above highlight Doll’s original forecast for 2022 and its mid-year update, based on data as of June 30.

Comments are closed.