The S&P 500 index made investors uncomfortable in recent weeks as it fell more than 5.0% from a year-to-date high on September 2nd. On the other end of the spectrum, however, there’s Zor Capital’s Joseph Fahmy, who sees the recent pullback as merely a “part of the seasonal weakness”.
Fahmy’s remarks on CNBC’s “Worldwide Exchange”
Fahmy quoted an over 2.0% recovery in benchmark since Monday to make a thesis that the market was now ready to step into the traditionally strong months of November and December. On CNBC’s “Worldwide Exchange”, he said:
From mid-September until mid-October, the market is traditionally weak due to several factors such as index rebalancing, quarter-end portfolio adjustments, end of the government fiscal year, debt ceiling, and news cycle shifting away from fundamentals. So, it’s pretty normal.
He’s convinced that post-mid-October, as the big cap technology names start to report quarterly results, the news cycle will return to fundamentals laying the groundwork for a strong last two months of the year.
Fahmy expects the U.S. Fed to favour equity friendly environment
According to Fahmy, the U.S. Federal Reserve will continue to provide the “equity friendly environment”. He doesn’t see the central bank “rattling the markets” in its next meeting on November 3rd.
I don’t see taper starting until 2022. And they’re not going to touch the interest rates for a while. They’ve made it clear that they’d rather be late than early as a lot of the economic numbers are back to normal.
Fahmy is still bullish on software and semiconductor stocks and recommends patience to get through seasonal weakness before a favourable Q4 kicks in.
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