Global mkt rally to cap soon: Oppenheimer AMC

Source : CNBC-TV18

Carter Worth of Oppenheimer Asset Management feels the market will cap the rally soon. He feels stocks are being bought or sold individually based on pattern interpretation rather than valuation. "I think people are tightening up their time frames in general. It’s a traders market and hence stops are being tightened.”

Also Read: India following China with couple of months lag: Bowen Cap 

Here is a verbatim transcript of the exclusive interview with Carter Worth on CNBC-TV18. Also watch the accompanying video.

Q: It has been a bit of a pause last few days - what do you do now, do you still keep holding your longs in global equities?

A: Our thesis is otherwise; it’s time to get off this rally. It was an impressive six weeks straight up and many stocks basically rallied too far too fast. We can look at some individual names but the thesis is that the preceding weakness, a six week plunge of February-March and now the mirror image recovery leaves the market at a place where it would just stop and go dead - sort of fair money, dead money.

Q: It has been a great market for traders though, does that still hold?

A: Right, I think people are tightening up their time frames in general and it’s a traders market, and hence stops are being tightened. There’s almost indiscriminate buying in certain parts of the market; particularly restaurant stocks, other retailers, consumer discretion. Big names like Wal-Mart was down all of the day, Coke down was all day, J&J was down all day and Procter was down all day and it goes on like that.

It’s a sort of indiscriminate buying within what you call low quality and bigger thicker names just not participating.  So on the week, we are down on the S&P, Dow and we think it’s sideways or down.

Q: So what is the right way to approach global equities right now, do you  revisit valuations, do you think of fundamentals again or do you think this market is increasingly getting focused on technicals, on levels where to get in and get out?

A: That’s my sense and that’s the feedback we are getting from people who were not too involved are becoming interested in the technique and those who are always involved relying on as much as ever. Stocks are not really being bought or sold individually but they plunge together and then they recover together. So that lends itself as much as ever to a pattern interpretation and rather than so called valuation.