Tags: tony dwyer | market | rally | record | highs

Tony Dwyer: Market Will Rally to Record Highs After Painful January

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Wednesday, 02 January 2019 04:34 PM

Canaccord Genuity's Tony Dwyer predicts a powerful stock-market rally will rise from 2018's wreckage after a rough start to the new year.

"The market will be down again 20 percent from peak," the firm's chief market strategist recently told CNBC.

"The history of a nonrecession, post-crash environment is: You get a sharp rally off the low for a couple of weeks, four to five weeks later you get a retest, and then you move to new highs," he said.

It's a pattern reflected during the 1987, 1998 and 2011 pullbacks, according to Dwyer.

"We look back over the course of the last 40 years. ... There have only been three nonrecession market crashes as measured by about a 20 percent drop in under four months," he said. "Of those three market crashes, you went back and saw a new all-time high," he said.

"You've got to do this intermediate-term bottoming process," he said. "Number 1, you want to see a collapse in the volatility. And, number two, you want to see a sharper, even more significant reversal in the S&P 500 than we've had yet," he said.

"As long as there isn't some kind of major collapse in credit from the Fed, something going on extra with the Fed that we haven't already seen, you should be able to make a new recovery high," he added.

To be sure, Wall Street struggled for direction after stumbling out of the starting gate on Wednesday as investor fears over a global economic slowdown dampened the spirit of bargain hunters on the first trading day of the new year, Reuters explained.

The session got off to a rocky start after separate reports showed a deceleration in factory activity in China and the euro zone, indicating that the ongoing trade dispute between the United States and China was taking a toll on global manufacturing.

As 2019 gets under way and with the worst year for U.S. stocks in a decade in the rear-view mirror, some analysts see a “January effect” attracting investors to the table.

“We had a lousy quarter and the negative returns for the year,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama. “However, we could see a more friendly Fed than what we had last year and we could see some movement on the trade talks.”

“Stocks are cheap and investors are looking to put money to work in the new year,” Hellwig added.

For his part, President Donald Trump on Wednesday played down the stock market’s drop at the end of 2018, calling it a “glitch” and saying the market will again go up once various trade deals are settled, Reuters reported.

Trump, speaking to reporters at a cabinet meeting, sounded upbeat about negotiations to reach a trade deal with China, saying they are coming along very well.

The United States and China are about one month into a 90-day pause in implementing tariffs and other measures in a trade war that dominated much of 2018, as they work on hammering out a deal.

U.S. trade deals with Canada and Mexico also await congressional approval.

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Canaccord Genuity's Tony Dwyer believes a powerful market rally will rise from 2018's wreckage.
tony dwyer, market, rally, record, highs
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2019-34-02
Wednesday, 02 January 2019 04:34 PM
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