Canaccord Genuity’s Tony Dwyer temporarily resigns his appetite for stocks.
On the occasion of the one-year anniversary of the Covid-19 floor, it informs investors that the market is in “no man’s land”.
“We are at a time when mega-cap stocks with Russell 1000 growth are no longer oversold and the subject of cyclical or economic recovery is no longer extremely overbought,” the company’s chief market strategist told Tuesday CNBC’s “Trading Nation”. “So I don’t see any short-term tactical advantage until we see a sign of an extreme that just doesn’t exist right now.”
Optimistic for the year, Dwyer was part of the S&P 500 groups that saw a strong economic recovery. However, he notes that these areas are not currently a good entry point for new money.
“The other part of the no man’s land is that the recovery issue has gotten so extreme that we’ve even downgraded finances [to neutral] last Friday, “he added.
The KBW Bank Index, which tracks the Group’s performance, rose by 107% last year. So far this year it’s up nearly 19%.
Dwyer believes earnings will get into trouble in the short term due to the risks associated with economic growth.
“That got us downgrading financials. They actually cut long-term interest rates because markets are starting to believe that the global recovery may not be that fast,” said Dwyer. “From our point of view, the risk is currently not due to higher interest rates and economic acceleration. We want that.”
Looking back at the low
Dwyer may be on hiatus right now. One day after the market low in 2020, however, he forecast significant relief from expectations regarding massive fiscal and monetary support. The market was back at an all-time high before the end of the year.
“The SPX [S&P 500] has already declined nearly 34% in less than a month, suggesting the 14-week RSI should be nearing its end of panic based on the 14-week RSI [Relative Strength Index]”Dwyer wrote to customers on March 24, 2020.” Such extremely oversold readings indicate that the “panic phase” of an accident was largely in the rearview mirror. “
On Tuesday, the S&P 500 closed at 3,910.52 – up 79% from the March 2020 low. Meanwhile, the tech-heavy Nasdaq is up 93% over the same period to close at 13,227.70.
“We still love the subject of economic recovery. We have excess liquidity that is historical. You get into recessions and keep bear markets running when you need limited access money. The opposite is the case today,” Dwyer said. “We have never seen so much global liquidity in the market.”
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