He Dow Jones Industrial ended the session with a loss of 504.22 points, or 1.3%, at 39,853.87. It closed lower for the fourth time in the last five sessions. S&P 500 ended down 128.61 points, or 2.3%, at 5,427.13. It was its worst day in percentage terms since Dec. 15, 2022. And the Nasdaq Composite was the big loser of the day with a fall of 654.94 points, or 3.6%, to 17,342.41. In percentage terms, The index had its worst day since October 7, 2022.
Answering the question posed in this note, Goldman Sachs’ flow guru, Scott Rubnerwho closely follows the correction of the New York square, shared in a document “who is not willing to buy on this dipHe said the market is still facing a “strong” correction trend and that it is not the right time to make aggressive purchases.
Cedears: It may be a good time to take profits
The investment advisor thinks the same Gaston Lentini In a report sent to clients over the weekend, he said there was a lot of uncertainty in the international market. It happens that Fewer and fewer companies are keeping markets up. Therefore, he suggests “not buying” S&P500 (SPY), nor Nasdaq (QQQ)but rules out going out to “sell desperately”. The strategy is based on “check“and if the investor has an open position, “that position continues to follow the trend.”
“Whoever wants more prudence can disarm part of the positions in these ETFs taking profit, to wait for definitions”, Lentini slides, this same strategy is the one he suggests applying, for example, for the Cedear of Nvidia“with a first support of 30% below the current price.”
And he adds that, “if the US controls inflation and we see the expected rate cut by the Federal Reserve in September, then The ‘iShares Russell 2000 (IWM)’ may appear as an alternative to place capitalconsidering that the relationship with the QQQ or the SPY “It has never been so extreme.”
The Double Nelson
Matteo Reschinihead of Research at Inviu, explains to Ambit the “double Nelson” suffered by the Cedears holders In recent days, with falls in both the certificates and the shares that replicate these assets and in the CCL, which It is the quote that follows.
“This reminds us that when you have Cedears in your portfolio, you are not really having Dollarsbut rather shares of American companies,” he suggests. Therefore, if there is a sharp movement in international markets, this will affect both the portfolio and the local exchange rate (CCL), he indicates.
The market’s “flight to quality”
Pedro Moreyradirector of Guardian Capitalshares in dialogue with Ambit, that the market is currently rotating from the entire technology sector and Artificial Intelligence (AI) to more lagging sectors such as “utilities”, “real estate” and even “small caps””.
“It can be interpreted as a kind of “flight to quality“because it is a rotation to consolidated and mature sectors in the economy,” analyzes Moreyra. He explains that what happened yesterday on Wall Street was a perfect storm, since said rotation and fall of the market are added to the weak results presented by companies such as Tesla and Alphabet“whose weightings are high in several technology indexes.” While more “value” companies, such as Coca Cola or Visa, presented more solid results in relation to market expectations.
For Moreyra, “he who has Cedears and have been invested in technology for some time, you can take profits and rotate into more conservative sectors.” While, for those with a long-term position in the S&P 500, “This only represents a short-term correction, and should be taken as an opportunity to buy more and continue accumulating.”.
Donald Trump’s possible victory in the investment battle
Ignacio Murua, financial advisor of Quicktrade SBSpoints out that under his analysis he sees a market that is a little expensive, especially in the technology sector, which represents no more and no less than 35% of the market in general. “The S&P500 index is somewhat overvalued and offers a false sense of diversification“, he says.
“The driver we have identified for the recent decline and the rotation towards more defensive sectors It is a possible victory for (Donald) Trump in the American presidential elections”, which could trigger a new trade conflict, with an increase in tariffs and a strengthening of the national industry.
“There is also speculation that the tax reform promoted by Trump during his first term, which expires at the end of 2025could be renewed, which would be positive for American companies. In addition, the growing tension between China and the United States could affect the semiconductor and chip sector,” he says.
And a clear example of how these factors are impacting the market was seen when Trump criticises Taiwan after winning the debateclaiming that the territory was taking advantage of American protection without offering anything in return. In response, Taiwan Semiconductor (TSMC) fell nearly 8%, while Intel, an American company, rose about 8% in two or three days. “This reflects what we believe is happening: a rotation towards more defensive sectors and, in particular, towards more industrial sectors of the American economy“, analyzes the strategist.
Portfolio rotation
Murua recommends to stock investors move forward with portfolio rotation towards more defensive sectorssuch as basic consumption, energy, health and industry, “selling and taking profits from what were good months in the technology sector.”
Meanwhile, for more conservative investors, advises taking into account the great value that exists in the negotiable obligations of first-line issuers of Argentine companiessuch as YPF 2025 and YPF 2029, which offer rates between 8% and 9%. In the current situation, it is advisable to overweight the ONs that pay the CCL, given that the exchange, which is the difference between the cash with liquidity and the MEP, is at zero, thus offering a better payment currency with interest rates that are much more attractive than the rest.
Thus, the current situation suggests a strategy of portfolio rotation towards less risky sectors and prudent management of the investments in Cedearswith special attention to changes in global monetary and economic policies, to avoid losing money, which is what every investor wants to avoid.
Source: Ambito
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