Santa Claus isn’t coming to Wall Street: Merrill analyst

Sorry, Virginia. There is no Santa Claus – at least for stock investors.
Bank of America Merrill Lynch technical research analyst Mary Ann Bartels says the Standard & Poor’s 500-stock index SPX appears poised to test its October lows of around 1100, which would represent around a 9% slide from Monday’s levels.
If those levels are breached, Bartels adds, the S&P benchmark could see a further drop to the 935-980 range.
Why the bah humbug?
For starters, speculators and risk-takers are in hiding.
Commodities continue to lose strength, Bartels notes in a research report published Monday, and commodity-linked emerging markets, particularly Brazil and India, are particularly vulnerable.
Meanwhile, gold GC2G GLD and silver are also on a downward path, with gold in its sharpest correction since 2008-2009, Bartels says.
She is bullish on the dollar DXY and sees the euro EURUSD tumbling below $1.20.
With stocks and traditional risk assets on the skids, bond yields have more room to decline, Bartels says.
The 10-year Treasury yield 10_year could fall to 1.5% from 1.8% currently.
The 30-year Treasury 30_year could approach a 2.1% yield, breaking the low of 2.5%.
Accordingly, bonds are favored over stocks at this point, Bartels notes.
Yet a sharp slump for stocks could establish an attractive buying point.
 “We expect a new cyclical bull market to emerge” around the middle of 2012, Bartels says. “Time and patience are needed.”
And deep pockets