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The newest Barron’s cover looks very bullish. It says that its top strategists expect stocks to increase 10 % in 2014 on top of the extraordinary gains of 2013.

But muffled by the bullishness, was a meeting with Ned Davis, creator of Ned Davis Research, and strategists Timothy Hayes Lance Stonecypher.

Davis told Richard Rescigno at Barron’s that he anticipates a stock market correction next year in the 20 % variety.

‘Right now, about 78 % of market teams are in healthy uptrends. That’d need to fall to about 60 % for us to state the market had actually lost upside energy. We also focus on the Federal Reserve, and it’s still in a very simple mode, despite all the discuss tapering. So, those two indicators are bullish.

‘However, we’ve actually looked at all the bearishness considering that 1956 and found 7 associated with an inverted yield curve [in which short-term rate of interest are higher than long ones]– a timeless indicator of Fed tightening up. Those declines lasted well over a year and took the market down 34 %, typically. Numerous various other bear markets happened without an inverted yield curve, and the average loss there was about 19 % in 143 market days. We don’t see an inverted yield curve anytime quickly. So, whatever correction we get next year is more likely to be in the 20 % array.’

But Davis anticipates the correction to be followed by a ‘wonderful buying chance.’ Davis likewise anticipates 2.5-3 % GDP growth next year.

Read the whole job interview at Barron’s »

SEE ALSO: Once Exchange’s A lot of Controversial Bull, David Bianco Now Has The Most Cautious Outlook For Stocks

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