We’re seeing some pretty good equity selling this week and a pullback from the 3400 level on the S&P, Tony Greer told Real Vision during today’s Daily Briefing. He attributed the rout in U.S. stocks to a combination of bad optics, including the lockdown in Europe, the media’s dual COVID and election hysteria, and the realization that no stimulus deal will be reached before election. He said the market is taking a pause here and that’s setting the tone for the week.
Despite the selling, Greer said he’s still confident in the U.S. equities rally. He thinks stocks will remain volatile until the election, but he doesn’t see any major macro tailwinds behind this pullback.
Greer shared his take on a number of markets during the interview, including the energy sector. He said that the big oil trade for him is oil stocks because they are holding ground amid bad headlines. Big picture-wise, Greer said he’s on the lookout for energy markets to potentially rally from here. He is range-bound in the commodity with a very close bullish eye on the energy equities.
Turning to the FX market, Greer noted that there have been no big moves in emerging markets – even from the Turkish lira, which has been coming apart at the seams. He said the euro and the dollar have both been range-bound.
Greer also pointed out that the VIX rallied sharply above the 200-day moving average right with the equity move and said he thinks the market is generally long volatility and looking for more volatility than we’re actually going to get into next Tuesday and the end of next week.
Finally, Greer shared his thoughts about PayPal’s support for bitcoin and said it is a great way for Bitcoin to buy into PayPal’s distribution network. He’s not shocked that the currency is rallying on that at 13,500 and counting, and said it is interesting to see how bitcoin is finding a seat at the macro table.
Greer summarized his outlook on the current state of markets as a return to the lockdown rotation: “Everything oil, banks, transport, and materials falls over, and everything tech goes up by order of market cap.”
Heading into the middle of the week before next week’s election, we’ve got a little bit of pressure on the markets, a little volatility that equity traders have been expecting, and we’re getting that old familiar lockdown rotation, he said. But in the absence of macro tailwinds behind the selloff, Greer said he’s going to keep playing this as a stiff upper lip bull market rotation.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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