Strong market breadth should prevent a major, protracted pullback: Wall Street bull Tony Dwyer

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Instead of worrying about pullbacks, Wall Street bull Tony Dwyer suggests investors should be buying stocks.

According to the Canaccord Genuity chief market strategist, more than 90 percent of S&P 500 stocks are above their 50-day moving averages. That degree of breadth, Dwyer said, typically coincides with robust gains.

It’s a trend he highlighted in a chart that goes back three decades.

“It’s really extraordinary,” he said Monday on CNBC’s “Trading Nation.” “Your worst-case gain over the course of the next six to 12 months is 9.2 percent.”

He calls it a “great intermediate term buy signal.” A gain of 9 percent or more would take the S&P 500 back into record high territory.

However, Dwyer isn’t discounting pullback risks altogether due to the sharp move off the December low.

“We never retested. So, to say you can’t have a pause in the upside would be ridiculous,” Dwyer said. “Rather than fearing that you go back down significantly, it’s something you should try to take advantage of.”

Dwyer’s comments came as the market kicked off the week in the red. Monday was the worst day for the Dow and the S&P 500 since Feb. 7.

He believes any setback to the 2019 rally would be only temporary. Dwyer, who has an S&P 500 year-end target of 2,950, cites a strong economic backdrop, open credit markets and a move dovish Federal Reserve for his bull case.

“Any kind of pullback that you get from current levels should be very brief and pretty limited. Even the ones that were a little bit nastier somewhere between 4 and 7 percent [since 1990] were made up for very quickly,” Dwyer said.

The S&P 500 is up more than 11 percent this year, and it’s about 5 percent away from its all-time high of 2,940.

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