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Buying Opportunity Or 1987 Again? Bulls, Bears Battle On PreMarket Prep

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Buying Opportunity Or 1987 Again? Bulls, Bears Battle On PreMarket Prep
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The S&P 500 has been all over the chart in recent weeks, teetering on the edge of bear market territory before roaring back with one of the best single days in history.

Several market experts weighed in on the health of the market and strength of the U.S. economy during Thursday’s Benzinga PreMarket Prep morning show. Here’s a rundown of what experts have to say about the late-year volatility and what investors can expect next.

Too Much Uncertainty

Chaikin Analytics Founder Marc Chaikin said there’s simply too much uncertainty to say that Christmas Eve’s big drop was the near-term bottom of the market.

“I’m likening this to 1987. We didn’t have a recession, but interest rates were going up,” he said.

In 1987, the market fell 22 percent in one day, and Chaikin said the market has matched that decline over about a 10-day period in December.

“What’s happening is that the natural buyers are on the sidelines." 

Buying Opportunity

Ivan Feinseth, partner and CIO at Tigress Financial Partners, said he’s as bullish as ever and termed the sell-off an amazing buying opportunity.

“We have an incredible disconnect between the strength of the economy and the weakness of the market. When you have that divergence, it’s a buying opportunity,” Feinseth said.

The recent sell-off was technical in nature and there has been a substantial amount of automated and forced selling, the analyst said. In his view, the biggest buying opportunity today is in tech, which has been hit hardest in recent months.

Top FAANG Pick

Loup Ventures Managing Partner Gene Munster said he's predicting Apple, Inc. (NASDAQ: AAPL) will be the best-performing FAANG stock of 2019.

“Over the next year, you’re going to see investors increasingly focus on revenue and earnings growth,” the research analyst-turned-venture capitalist said. 

“We think there is risk to the March numbers based on soft smartphone demand in emerging markets, but I don’t think there is anything structurally wrong with the iPhone franchise. I do believe that [Apple] has a chance to be twice as high as it is today.”

Buyers Not Responding

Hamzei Analytics Founder Fari Hamzei has a bearish stance on the recent market action. The recent lows should be buying opportunities, but traders are not responding to technical buy signals or fundamental support levels, he said. 

“The only thing left is the confidence issue ... there is confidence in our government that is lacking, confidence in our institutions," Hamzei said. "Who brought that in? Don’t look at me. Go to Washington and look at the two ends of Pennsylvania Avenue. Until that does away, I’m afraid we’re in this malaise." 

Sluggish 2019 Already Priced In?

Finally, Ryan Craver, retail expert and founder of Commerce Canal, said Q1 and Q2 of 2019 might be difficult for the retail sector and for the U.S. economy as a whole. 

“I think seeing the best comp from Walmart in 10 years, seeing the best comp from Target in 13 years — that’s not something we should get used to. So I think it’s going to be difficult in Q1 and Q2. With that said, I do believe a lot of that is priced into the market,” he said. 

Given all the uncertainty in the market, Craver said he would recommend that investors stick with secular growth trends, such as e-commerce, direct-to-consumer sales, streaming services and online advertising.

Price Action

After yet another extremely volatile trading session with wild swings on Thursday, here’s a look at where some popular index ETFs stand since Oct. 1: 

  • SPDR S&P 500 ETF Trust (NYSE: SPY) is down 15.1 percent.
  • SPDR Dow Jones Industrial Average ETF (NYSE: DIA) is down 13.5 percent.
  • PowerShares QQQ Trust, Series 1 (NASDAQ: QQQ) is down 17.7 percent.
  • BRCL BK IPTH S&P 500 VIX SH FTRS ETN (NYSE: VXX) is up 85.8 percent.

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DateFirmActionFromTo
Jan 2019Bank of AmericaReiteratesNeutralNeutral
Jan 2019CitigroupReiteratesBuyBuy
Jan 2019Morgan StanleyMaintainsOverweightOverweight

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