Big Bets are Being Placed on a Strong April Rally


We see lots of Sell-side research and analysis (taking a contrarian POV) daily, and over the years certain equity strategists have made some very good calls.

On 19 March in the midst of what was some of the most brutal, high-velocity machine selling ever, Barry Bannister and his team at Stifel called for a reversal, it happened a few trading days later.

At the time, Mr. Bannister and his analysts called for a rally to 2,750 on the S&P 500, the market reversed on 23 March and we rallied back to 2,640.

Monday’s massive rally actually closed above that mark at 2,663, investors have been pounded with grim economic data: job loss data and millions of workers filing for unemployment. Monday’s solid rally may have exhausted the Bears for now.

At the weekend, after what has been the most remarkable 6 wks in stock market history, the Stifel team is again standing with their call for a rally to 2,750 by the end of April. In an updated market and portfolio strategy research piece, they urge investors to stay focused, despite the daily flow of alarmist news.

The research report noted this: We see US COVID-19 diagnosed cases peaking later in April (then dissipating in Summer, possibly returning winter 2020-21), with stocks rising in advance of the near-term virus Top. The S&P 500 historically looks 4 months out, and currently discounts declining earnings-per-share (EPS) we provisionally estimate $130 EPS in Y 2020 estimated Vs $142 prior, and weak GDP through early August, but Equity Risk Premium is now attractive if deflation is avoided.

Have a healthy day, stay home, Keep the Faith!

#COVID-19#deflation#DIA#EPS#market#QQQ#rally#RUTX#S&P 500#SPX#SPY#Stiffel