Yahoo Finance Expect 'wide sloppy range' in months ahead: top market strategist
Expect a “wide sloppy range” for the markets as individual states restart their economies while still managing the COVID-19 pandemic, says one top strategist.
“The coming six to nine month period is probably going to be a wide sloppy range, one where you have a lot of fits and starts, and many cycles within that, and really that’s a function of the healthcare situation more broadly,” Chris Pollard, head of market strategy at Cowen, told Yahoo Finance.
Strategists have noted the rally which followed the March 23rd market lows was fueled by mega-cap stocks.
Pollard points out that until recently, the markets had made little upside progress since April 9th — the same day the Federal Reserve announced its $2.3 trillion plan.
“The quality of ... what was driving the upside since April 9th ...was really cyclicals, laggards, stuff that was really not what we would be looking to see drive the market right now,” said Pollard. “There was a lack of engagement, and it was really losers catching up versus winners continuing to win.”
[Read More: Stock market news live updates: Stocks fall as Amazon shares sink after earnings]
‘Uncertainty is the name of the game here’
Pollard says determining a bottom hinges on what the economic recovery will ultimately look like as states begin re-opening their economies while still dealing with the pandemic and waiting for a coronavirus vaccine.
“How deeply affected our behavioral trends are going to be, what our activity is going to look like, say a month, a month-and-a-half on from the restarts, and really does the health situation get any worse as a result of that,” said Pollard. “Uncertainty is the name of the game here.”
Pollard predicts the S&P 500 (^GSPC) could retrace back to the 2650 level, or even 2,400 - 2350 if there is further deterioration on the macro front up ahead.
On Friday stocks were trading lower following earnings results from Amazon (AMZN) Apple (AAPL), Chevron (CVX) and Exxon Mobile (XOM), and President Donald Trump threatened retaliation on China over the coronavirus pandemic.
Ines covers the U.S. stock market from the floor of the New York Exchange. Follow her on Twitter at @ines_ferre
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