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Fidelity: 'Stealth Bear' Market Could See 'Big' Rally

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By    |   Friday, 15 January 2016 02:40 PM

Jurrien Timmer, director of global macro research at Fidelity Investments, says while parts of the market have been mauled by a “stealth bear,” he expects somewhat of a rebound later in the year.

"If you look deeper within the market, the Russell 2000 is down [about] 22 percent from its high. That's bear market territory," Timmer told CNBC. "You could argue we're in a stealth bear," Timmer said. "The markets are very oversold, extremely oversold.”

A bear market is a 20 percent decline from the highs, CNBC explained. For the S&P, that means 1,707.78. The Nasdaq is now 14.6 percent off its highs and it would be in bear market territory if it hit 4,185. The bear level on the Dow would be 14,681.

But Timmer sees hope coming later in 2016. "This is going to be a first half of the year versus the second half of the year, where I think we're setting up for a very big 'V' bottom, the way we saw in 2009, only this time in the beaten-down sectors like energy, emerging markets, and commodities."

Another respected financial voice also is holding out hope that the bloodshed in the market will eventually end.

"I do not think we'll enter bear market territory, assuming that's defined as 20 percent (decline), but needless to say the only way we can avoid that is if the price of oil stops going down and the dollar stops going up, because those two things were the cause of the decline in earnings expectations all year last year," Bob Doll, Nuveen Asset Management's chief equity strategist, told CNBC's "Worldwide Exchange."

Doll speculated that the current equity sell-off is being accelerated by abnormal selling by sovereign wealth funds at a time when many corporations are in their quiet periods before earnings, and therefore, not buying back shares of their own stock.

"They're the things that are ganging up and causing people to say, 'Let me sell now and ask some questions later.'"

Meanwhile, market watcher Dennis Gartman said a bear market is already upon us. "I think it began globally last May. I think it only became obvious in the United States over the course of the last several weeks," the publisher of The Gartman Letter told "Worldwide Exchange."

As for his advice to average investors: "Cash is the best place of all right now," he said.

Stock extended declines earlier after reports showed retail sales decreased in December to cap the weakest year since 2009 and a Federal Reserve gauge of manufacturing in New York slumped. The 0.1 percent drop in retail sales matched the median forecast of economists surveyed by Bloomberg. The New York Fed’s Empire manufacturing index plunged to minus 19.37, lower than the minus 4 economists had forecast.

“The growth picture in the U.S. is getting cloudier, and the fact that the Fed tightened in a weak environment is certainly not helping,” said Krishna Memani, chief investment officer at Oppenheimer Funds Inc. in New York. “The data is clearly supporting how the markets are feeling at the moment.”

The Fed has stressed the pace of further rate increases will be gradual, but data-dependent.

Traders are pricing in about a 30 percent chance of the central bank acting in March, while odds for an increase this month have stayed low since the December liftoff.

“The laser focus with the markets is on oil and weaker oil bleeds beyond the energy sector,” said Joe Quinlan, New York-based chief market strategist at U.S. Trust, Bank of America Private Wealth Management.

Quinlan recommends buying beaten down stocks that have growth potential like in defense spending, water infrastructure and global health care.

“This is one of these market moments when fear trumps all rationality. We will have to work through this panic period to move forward,” he said.

(Newsmax wire services contributed to this report).

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Jurrien Timmer, director of global macro research at Fidelity Investments, says while parts of the market have been mauled by a "stealth bear," he expects somewhat of a rebound later in the year.
Fidelity, Stealth Bear, stock Market, investors
Friday, 15 January 2016 02:40 PM
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