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If history is any indication of where the market moves in the months following a severe market correction, we can expect the S&P 500 to move up over the next three, six and 12 months, says Sam Stovall, chief equity strategist at S&P Capital IQ, Standard & Poor’s investment research division. According to Stovall, in the three months following eight severe corrections dating back to 1948—similar to the near 20 percent drop we saw between April and October of this year—the market has historically jumped 13.5 percent on average. On average, the market was up 23 percent for the six months after these eight corrections and nearly 32 percent in the 12 months following these events.

“So if history repeats itself, and there’s no guarantee it will, we can be encouraged that over the coming three, six and 12 months, the market may end up working its way substantially higher,” Stovall said, during an outlook webinar this week.

As he says, there’s no guarantee that history will repeat itself, but S&P Capital IQ does project the S&P to close at around 1400 by the end of 2012, an 11 percent price appreciation from current levels. Investment managers have generally been bullish on equities since this summer’s volatility, but advisors have been less bullish since the beginning of the year.

S&P Capital IQ projects earnings growth of 8.5 percent for 2012, Stovall said. The firm has a cyclical bias for 2012, overweighting the information technology, consumer discretionary and consumer staples sectors, while underweighting telecommunications and financials. On an individual stock perspective, Stovall recommends investors focus on large-cap issues with quality rankings and dividend yields.

“However, we do acknowledge the fact that a divided Congress could end up muting a lot of this potential gain,” Stovall said. “Sovereign debt crisis, high unemployment levels and political gridlock, just to mention a few of the headwinds we face, are not miraculously likely to disappear just because we’ve started a new year.”

While S&P does not predict a recession in the U.S., it does expect a half-speed recovery in the U.S. and a mild recession in Europe to last about six months.

“So we don’t think that a recession is around the corner, but we definitely believe the U.S. economy’s growth is going to be anemic, about half its normal speed, and certainly vulnerable to exogenous events should we find the forecasted recession in Europe turns out to be deeper than we project,” Stovall added.

But Alec Young, global equity strategist for S&P Capital IQ, said it’s not time to give up on international equity exposure because of the potential for a better tone next year.

“Overall, our view is that you don’t want to be jumping out of international exposure at this point,” Young said. “Maintain what you have. If your allocations are below what you and your advisor have set, you’ll want to be using this volatility to increase that exposure, get it back to your target.”

Estimated global GDP is 2.9 percent, slightly below the 3 percent estimate for 2011 by IHS Global Insight. During a Lipper panel discussion this week, Lisa Shalett, chief investment officer of Merrill Lynch Wealth Management, said global GDP will be key to the resiliency of the U.S. markets because countries are so commingled.

“What folks need to remember is that the S&P 500 is not all that levered to U.S. GDP anymore; it’s actually levered to global GDP,” Shalett said. “Yes, the U.S. has shown some level of local, or domestic, resilience, but the question is how quickly is that resilience going to be tested by what’s really going on globally.”

But real GDP growth in the U.S. in the first, second and third year of the current recovery has been about half of the average year-over-year changes in real GDP growth for the first three years of economic expansions since 1949, Stovall said.

The U.S. could definitely benefit from a ‘Santa Clause rally’ to finish out the year, Stovall added.

“If we do end up with no Santa Clause rally, the stock trader’s almanac says, ‘If Santa Clause should fail to call, the bear will come to Broad and Wall,’ so let’s hope we do get a little bit of an end of year rally.”