The Federal Reserve’s recent actions and statements have reshaped market expectations and signaled a shift in sentiment. According to Marc Chaikin, founder and CEO of Chaikin Analytics, the era of “buy everything” is over, and it is now a stock picker’s market.
Chaikin appeared on Benzinga’s Pre-Market Prep and shared his insights. He emphasized that the Fed is driving the market bus and highlighted the comments made by Governor Waller, which provided clarity on Chairman Powell’s stance. Chaikin noted that the previously wild forecasts of multiple rate cuts this year are no longer likely, as there is no rush for such actions.
In the final quarter of 2023, investors responded to the realization that rate hikes had finished by pouring money into exchange-traded funds, particularly the SPDR S&P 500 (SPY) and the Invesco QQQ Trust (QQQ), which tracks tech stocks on the NASDAQ. However, Chaikin believes that the market dynamics have shifted, and it will no longer be a “buy everything” market in 2024.
Despite this change, Chaikin remains bullish on stocks. He sees support for the S&P 500 around the 4,700 and 4,680 levels. While tech stocks fueled the rally in the final quarter of 2023, Chaikin still sees value in the sector. Interestingly, he notes that tech stocks have not been negatively impacted by the rise in the 10-year Treasury yield, which is usually a cause for concern due to valuation concerns. In particular, Chaikin is not focusing on mega-cap tech stocks but rather sees potential in software companies like Synopsys (SNPS), which provides software used in the semiconductor industry.
Chaikin also expressed enthusiasm for the biotech sector, which he described as “on fire.” He mentioned companies such as Gilead Sciences (GILD) and Regeneron Pharmaceuticals (REGN) as well as CVS Health Corp (CVS) as attractive investment opportunities. He highlighted the long-term visibility of these companies’ product pipelines and expressed confidence in their business models.
Overall, Chaikin’s analysis suggests that while the market dynamics have shifted, there are still opportunities for investors to find value in specific stocks. As the Fed continues to play a significant role in driving market trends, it is crucial for investors to adapt to the new stock picker’s market and carefully select their investments.
