TM Editor's note: Earlier this year, we published Sanjeev Sharma's stock market prediction for 2015 and how he believed the market would rise. Below his latest Q&A style interview following up on this earlier article to discuss current market volatility.

Q: In January, you said that the market would go up in 2015. Thereafter, you wrote an article at Talkmarkets.com where you predicted that the chances of interest rates going up are low and therefore the market would go up.

Sanjeev: That’s Correct.

Q:   Sanjeev,  the S&P this year moved up slightly more than 3% at one point, but now we are seeing wild volatility. This is though the interest rates have barely increased.

Sanjeev:  As you know, to predict the market I utilize my formula which is based on factors impacting disposable income of the masses. Unlike previous years, where a majority of factors were positive, this year, with the exception of wages, other factors are not necessarily positive for the consumer.  For example, home prices have now risen to unaffordable levels again, gas prices at retail are still at the same level where they were in the beginning of the year and you can feel inflation all around you in services and goods.

Q: But that cannot explain the wild swing in S&P last week ?

Sanjeev:  There are many political and economic events that impact the stock market on a daily basis, but on a long term basis, a broad stock market index like S&P is nothing but a reflection of the demand of new goods and services.  This demand is directly proportional to the disposable income of the masses. As long as you can understand the movement in these factors, you can predict if the market will go up or go down in an year.

Q: The market could have crashed due to the China factor. But, Why did the market recover quickly last week?

Sanjeev:  While China’s slowing economy does have a short-term impact on the US stock market, it cannot have a long-term impact. 70% of the US economy is consumer driven. If China’s Yuan is being devalued, it helps the CPI go lower and increases the disposable income of people.

Q: Do you still think the market will go up for the rest of the year ?

Sanjeev:  With the recent Chinese market crash and the devaluation of Yuan, the dollar has effectively become stronger.  An increase in interest rates would further make the Dollar stronger against the Yuan and other currencies, thus making US exports less competitive. Also, rapidly increasing interest rates could slow down the US economy which is the main engine of global economy now. Therefore, I do not think the interest rates will be increased this year. If at all, it would be done at extremely slow pace.

Q: Why don’t you think china can have a long-term impact on the US stock market?

Sanjeev: As I stated in one of my earlier articles, a market crash outside the US has always helped the US stock market in the medium term as money starts flowing back to the United States, whether it is the Asian crisis or issues in Europe or the Emerging Markets.

Q: The housing market is again looking like a bubble. Do you think, we will see a repeat of 2008?

Sanjeev: In certain areas like New York City where the prices have increased outrageously and virtually every block has new construction, I do expect a correction.

But overall, there are no subprime buyers this time, and most investors have either bought the properties with all cash or with large down payments. Further, the FED, with their experience in the last crises would not rapidly increase the interest rates, but at slow rates. So, I do not see any bubble bursting in most US.

Q: Thank you for your time.

Sanjeev: Thank you for your call.