Investment strategist Laszlo Birinyi, who in December said stocks had bottomed, now says they’re ready for a fall.
He tells Bloomberg TV that a decline is natural after the torrid 23 percent rally the Standard & Poor’s 500 Index has enjoyed since hitting a 12-year low March 9.
“You’ve had a lot of stocks make very condensed, very sharp, compressed moves,” Birinyi says.
“Investors should realize that with the market driven by day- to-day news, there’s nothing wrong with booking some profits.”
Birinyi says this market reminds him of 2007, when the S&P 500 rose only 3.5 percent, but the S&P 500 Energy Index appreciated 32 percent.
“This is a market where you can make money by changing some of your strategies and tactics,” he says.
For example, investors in Goldman Sachs ought to consider unloading the stock given its 51 percent jump since March 9.
“My attitude is, if you bought it at $75 to $80 and you’ve gotten to $110, take the money and run,” Birinyi says.
“Since everyone is focused on indexes, on baskets and ETFs and the like, the inefficiency is stock selection, and this is a market which gives you that opportunity.”
Dan Wantrobski, a technical analyst for Janney Montgomery, says the S&P 500 could gain another 15 percent.
“The average duration of a bear market rally is three to four months,” he tells The Wall Street Journal. “I think this has some legs.”
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