On the occasion of the first anniversary of the Covid-19 fund, he tells investors that the market is in “no man’s land”.
“We are in this period where Russell 1000 growth mega-cap stocks are no longer oversold and the theme of cyclical or economic recovery is no longer extreme overbought,” the company’s chief market strategist said on Tuesday. to CNBC’s “Trading Nation”. “So I don’t really see a short-term tactical advantage until we see a sign of an extreme that just doesn’t exist right now. ”
Dwyer, who is bullish for the year, has been biased towards S&P 500 groups linked to a strong economic rebound. But he notes that these areas do not provide a good entry point for new funds at this time.
“The other aspect of no man’s land is that the theme of economic recovery has become so extreme that we have even downgraded financial data. [to neutral] last Friday, ”he added.
The KBW Bank index, which tracks the group’s performance, is up 107% over the past year. So far this year it has climbed almost 19%.
Dwyer believes that earnings face short-term problems because of the risks associated with economic growth.
“This is what led us to downgrade financial stocks. In fact, long-term interest rates are falling because the markets are starting to think the global recovery may not be as fast, ”Dwyer said. “The risk is not in our view at the moment higher interest rates and an economic acceleration. This is what we want. ”
“The SPX [S&P 500] has already fallen nearly 34% in less than a month, suggesting the panic phase should be almost over based on the 14-week RSI [Relative Strength Index]Dwyer wrote to customers on March 24, 2020. “Such extreme oversold readings suggested that the ‘panic phase’ of an accident was largely in the rearview mirror.”
On Tuesday, the S&P 500 closed at 3,910.52 – a 79% gain from the March 2020 low. Meanwhile, the high-tech Nasdaq rose 93% over the same period and closed at 13,227.70.
“We still love the theme of economic recovery. We have historic excess liquidity. You enter recessions and sustained bear markets when you need money with limited access. The opposite is true today, ”said Dwyer. “We have never seen this level of global liquidity in the market. ”