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(Bloomberg) — With inventory markets staging a robust rally, Credit score Suisse Group AG strategists have a message for buyers: promote into it.
A group led by Andrew Garthwaite stated they continue to be cautious on equities as diminishing actual cash provide, elevated inventory valuations and “excessive” danger to earnings all suggest additional declines earlier than the market finds a backside.
Primarily based on their earnings estimates for subsequent 12 months, Garthwaite sees the S&P 500 Index buying and selling between 3,000 and three,200 factors — no less than 13% beneath present ranges. “Bear markets are bigger and final for longer,” he wrote in a technique notice.
The warning will function a reminder of the market’s fragility as world inventory indexes rally on optimism that weak financial information will deter the Federal Reserve from tightening coverage at a very aggressive tempo. Bond yields have pulled again, whereas S&P 500 futures suggest one other session of sturdy positive factors for the benchmark index on Tuesday.
Some technical indicators additionally level to a short-term bounce, one being that 88% of S&P 500 members are beneath their 200-day shifting common. In response to Garthwaite, markets have posted one-month positive factors from these ranges “100% of the time.”
However with fairness funds but to see “vital” outflows, there was “little signal of capitulation,” the strategist stated. As well as, though downgrades to company earnings have begun, financial information implies additional draw back, he stated.
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