Market bull John Stoltzfus sees ways to make profits in the year’s second half, but it won’t come easy.
The Oppenheimer Asset Management chief investment strategist warns the wild swings won’t subside anytime soon due to how traders and nervous investors are reacting to headline risks.
“They’re waiting for some catalyst to cross the tape that will justify taking near-term profits without FOMO, or fear of missing out,” Stoltzfus told CNBC’s “Trading Nation” on Wednesday.
Stoltzfus notes there are several risk factors to consider, particularly the spike in coronavirus cases and whether a vaccine will become a reality.
“What’s going to keep traders on their toes will be developments related to the Covid-19 pandemic,” Stoltzfus said.
He also lists the Democratic Party’s choice for its vice presidential candidate and second-quarter earnings season as potential near-term downside catalysts.
Yet, Stoltzfus doubts the latest jitters will derail the new bull market. He calls the market “resilient,” citing the historic rebound from the 2008 financial crisis and from the coronavirus-induced March low as examples.
“We’re going to see another round of emergency stimulus put forth for the economy that should be good for both Main Street as well as for Wall Street,” he said.
Stoltzfus’ second-half playbook
When the coronavirus outbreak began spreading globally in February, Stoltzfus, who came into 2020 as the Street’s biggest bull, got cautious and warned investors there was nowhere to run.
He suspended his S&P 500 year-end target of 3,500 on March 23, the day of the market meltdown. Since then, the index has surged 42%.
During that period, Stoltzfus started getting more constructive on stocks, highlighting technology as one of his top plays.
The pockets he likes best include economically sensitive stocks that should do well as the recession ends.
“We like consumer discretionary. We also like industrials, because industrial stocks today use a lot more technology than ever before,” Stoltzfus said. “As a contrarian pick, we like financials — which we think is a misunderstood sector in a world that needs big financial companies to finance the new economy that we’re moving towards.”