U.S. stocks could be preparing for a bounce, according to one well-known quantitative analyst.
Elaine Garzarelli, president of Garzarelli Capital Inc., New York, who's famous for calling major market moves including the 1987 crash, said in a recent research note that she believes, based on her market sentiment indicator, that stocks are set to rally.
"Last year, when the S&P 500 bottomed on Aug. 12, our sentiment indicator dropped to 60.3% bulls, from over 76%, and the S&P 500 rose from Aug. 12 to year-end by over 14%," she wrote.
"After reaching a bearish high of 76.2% bulls at year-end 2004, the number of bulls reported (April 28) has fallen to 59.7%," she continued. "I would bet on the S&P 500 floating upward and then taking off when the Fed stops tightening, just like it did after the election of '04."