Healthy Bull Market
Oppenheimer technician Ari Wald, named 2016's Technician of the Year, believes the bull market in US stocks is likely to continue into 2017 and cites cyclical leadership, healthy breadth, narrowing credit spreads, and an overall improvement in technical measures that help to gauge underlying market strength.
Given the above, we should view this as a “healthy bull market and continuation (of the upward) trend,” Ari said recently on our podcast.
Ward delineates that both level and direction of interest rates are important considerations for the stock market, with “low and rising rates” indicative of market growth and being “good for stocks.”
Also, Ari said that range bound commodity prices are confirming a stable inflationary environment conducive for market growth.
He regards a high dollar as an “outlier” requiring close monitoring given its disruptive role in the commodity market crash in 2014 while believing that we are in a “commodity supercycle bear market.”
“We do think that there is a ceiling out there for commodity prices, we don’t think we have seen it just yet,” Ari said.
When and How to Invest
Ari thinks that the semiconductor group of the technology sector is a terrific candidate to lead an ongoing secular bull market advance.
He views financials and industrials as having appreciated “a lot in the short run,” and some consolidation may be imminent.
On the stock market as a whole, Ari maintains a confident view, arguing to time purchases during pullbacks, noting that Fed tightening will likely “moderate the pace of the rally” going forward.
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