BTIG’s Julian Emanuel has a message for investors: Brace for wild market swings.
He believes conditions are ripe for a sustainable volatility comeback that could spark a 15% downdraft.
“There’s a lot of headline risk out there, and we think markets are going to really chop around,” the firm’s chief equity and derivatives strategist told CNBC’s “Trading Nation” on Monday. “Investors need to get their mindset geared more to the types of moves that they saw in 2018.”
That was a year that’s hard to forget. The market clearly didn’t run in a straight line. Investors were forced to cope with an early February correction, all-time market highs and later got hit with the historic Christmas Even plummet.
“We got record levels of overbought in the market [last month],” added Emanuel. “It’s reasonable to expect more volatility.”
According to Emanuel, global growth pressures linked to the coronavirus outbreak and election primary season hold serious downside risks.
“We’re thinking a market pullback on the order of 7 or 8% in total,” he said. “If the headlines deteriorate you could overshoot that.”
Despite the warning, Emanuel stresses he’s not turning bearish. Emanuel cites sustainable economic and earnings growth for his longer-term forecast.
And, that’s why if an even bigger near-term pullback strikes stocks, he plans to tell investors to buy.
“We want people to think about being a buyer down 10% to 15% as opposed to hedging once the barn door has already opened,” Emanuel said.