MARKET OUTLOOK, 03 FEBRUARY 2020
The S&P500 index was down -2.1% last week and closed at 3225.5, mostly due to Coronavirus fears, market beeing overbought and other, less significant factors, such as the Brexit.
There has been much debate over the factors for the last downturn in the markets and where are we headed? is it going to be just a correction? Or is it the beginning of a bearish market? , traders seem to be split 50/50.
We reiterate what we have been saying for quite some time, It does not matter one bit! , an experienced trader manages risk, this means that when the risk is too high, we gradually shift assets from risky ones to less risky assets, and when the conditions are favorable, we shift them back to higher risk, this way you don’t have to anticipate what is going to happen but manage the current situation.
Alpha Over Beta Next Week Forecast
As for our forecasting models, we see the current point as a pivot point, our model has forecasted the next line to be around the 3150 levels for the S&P500, current level of 3200 is close enough for us to start picking up risk since we can’t time the market we believe that we are at the epilogue of this, long overdue, correction and we start shifting our assets back to the higher risk area.
AlphaOverBeta sectors ranking
As usual, we are looking for sectors that are picking up on momentum.
The Utility sector and the Pharmaceuticals sector are the leaders in this market, they have the best potential to breakout and continue to lead the next move up, on the flip side Oil and gas sector and their related sectors are the weakest and have been so for the past few weeks.
AlphaOverBeta in Metals
Palladium and Gold lead the metals with strong momentum potential and should continue to do so in the next few weeks, on the short side Copper is the weakest metal in the family and should be reduced in size, we wouldn’t recommend shorting right now as copper is very oversold, if there is a correction and a failed attempt to jump higher then copper would be a good short opportunity.