The Federal Reserve is driving the market bus. Fee reduce expectations have been re-drawn, and the “purchase all the pieces” sentiment that powered fairness indices greater within the closing quarter of 2023 is over. That is now a inventory picker’s market.
These are the ideas of Marc Chaikin, founder and CEO of Chaikin Analytics, who appeared Thursday on Benzinga’sPre-Market Prep.
“The Fed is driving the bus and we acquired some readability from Governor Waller into what Chairman Powell is de facto considering, they usually see no cause to hurry price cuts. So these wild forecasts of 5 to 6 cuts this 12 months are just about off the desk,” Chaikin mentioned.
He added: “It’s not going to be a ‘purchase all the pieces’ market in 2024.”
“That occurred when traders realized again in October that price hikes had completed, and simply threw cash into exchange-traded funds, primarily the SPDR S&P 500SPY and the Invesco QQQ BeliefQQQ, which tracks tech shares on the NASDAQ.”
Nonetheless Bullish On Shares
He stays bullish on shares, nevertheless, and sees help for the S&P 500 across the 4,700 and 4,680 ranges.
So, it’s going to be a inventory picker’s market, he believes, and though it was tech shares that powered the ultimate quarter rally in 2023, he nonetheless sees worth within the sector.
“What’s fascinating is that tech shares haven’t been pressured by the upper charges within the 10-year Treasury yield — within the final 18 months that has been a really direct relationship — the 10-year yield strikes up and tech shares get pressured due to p/e valuation issues, and that hasn’t been the case,” he mentioned.
However in tech, he’s not trying on the mega-cap shares. Software program shouldn’t be quitting, he says, and sees worth in Synopsys SNPS, the maker of software program used within the semiconductor business.
“It’s all about semiconductors, with AMDAMD and NvidiaNVDA making new highs, and Synopsys has taken a number of warmth for its merger with Ansys ANSS. These are two nice firms combining. Synopsys is nicely positioned to help the semiconductor market,” he mentioned.
The Synopsis share worth, which began to say no after mid-December, has fallen additional because it introduced this week it was shopping for Ansys for $35 billion.
“The talk about whether or not they’re paying an excessive amount of for Ansys or not will dissipate over the following 12 months. I feel Synopsys is a steal down right here,” he added.
Biotech ‘On Fireplace’
Chaikin additionally likes biotech within the healthcare sector, which he says “is on hearth.”
“I’m taking a look at shares reminiscent of Gilead SciencesGILD, which has been fairly dormant for the final two years. I’m trying on the larger names like Regeneron Prescribed drugsREGN the place there’s long-term visibility into their merchandise pipeline.”
Chaikin says that there are a number of biotech shares — “it’s a fruitful space.” He additionally likes CVS Well being Corp CVS.
“It’s a purchase right here. We advisable it final week in considered one of our newsletters — I similar to their enterprise mannequin.”