Fidelity’s Jurrien Timmer thinks the S&P 500 might be ready to bounce back after its recent 20% drop from its peak. He sees the market’s recent dip as a necessary correction.
The Pendulum Swings
Timmer, using a long-term chart, points out that the S&P 500 has been fluctuating around a trendline since 2011. The recent fall has taken it significantly below this line, suggesting investors have absorbed enough bad news to make a rebound likely. He likens the market’s movement to a pendulum swinging from one extreme to the other. A break above the trendline would confirm this.
A Long-Term Shift?
While optimistic about a short-term recovery, Timmer cautions that the long-term bull market that began in 2009 might be nearing its end. He believes a changing global landscape, with factors like de-globalization and a potential shift away from the US dollar, could significantly impact the market.
The Future of Investing
Timmer predicts a shift in investment strategies. Investors might favor fundamentally strong, undervalued companies, even if they’re outside the US. He suggests the dominance of the largest seven tech companies (“Mag 7”) is weakening, leading to a potential rotation towards value stocks and international markets. This shift, he argues, is a significant change, impacting not only potential returns but also market leadership.
