Veteran bull Ed Yardeni says stocks can fall another 10-15% but the market will then make a 'comeback'

• Wall Street indices saw their biggest weekly fall since late June last week, and economist Ed Yardeni thinks a 10-15% correction awaits.
• But the president of Yardeni Research doesn't think that's a bad thing.
• He said: "I'm actually somewhat comforted by the market taking a break here. It's a healthy development."
• He thinks technology stocks may stage a "comeback" even if his predictions are realized.
• Visit Business Insider's homepage for more stories.

Economist Ed Yardeni expects stocks to fall by another 10-15% after last week's technology-led sell-off but he thinks that is not necessarily a bad thing.

The president of Yardeni Research, a long-time equities bull, told CNBC's "Trading Nation" Friday: "The market has had a huge move since March 23. The Nasdaq is up something like 70%. That's a melt-up. It's not as big as what we had in 1999 when we had over 200%."

The Nasdaq rose around 400% between 1995 and early 2000 because of a rush into tech stocks and internet related companies. The bubble burst in early 2000, and the Nasdaq lost more than 70% between 2000 and 2002.

He added: "I wouldn't want to see a repeat of that. So, I'm actually somewhat comforted by the market taking a break here. It's a healthy development."

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On Thursday, US stocks fell the most in three months as investors sold high-flying tech stocks, causing the Nasdaq-100 to experience its sharpest decline since March, with a drop of 5.2%.

The S&P 500, and the Dow 30 and the Nasdaq all closed lower for a second straight session as investors weighed the sell-off.

Yardeni said he expected some kind of melt-down, given how high valuations were, in an August interview with Business Insider.

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While he said a drop of another 10-15% wouldn't be surprising, Yardeni said the fundamentals for the tech sector remain strong and a potential coronavirus vaccine and an improving economy would likely support cyclicals.

"It has been disconcerting to see that five stocks account for 25% of the market cap of the S&P 500," said Yardeni. "But those are the stocks that are actually getting corrected here and are leading the way on the way down."

He maintained his forecast for the S&P 500 to hit 3,500 points by the end of the year. This is just 2% higher than Friday's close just shy of 3,427.

Last month he told Business Insider: "As long as the perception is that the global economy is recovering, then markets can reach 3,800 earlier than next year."

"We may very well see a broadening into what people call 'value stocks' — more specifically into financial stocks, for example," Yardeni said. "But that doesn't mean that technology doesn't make a comeback as well. There is so much cash out there that was raised during the mad dash for cash in March, and that has been provided by fiscal and monetary policy," he concluded.