HSBC strategist Max Kettner anticipates a "very short-term rebound" in the US stock market, with the tech giants potentially benefiting the most. However, he cautions that any rebound could set the stage for further declines.
Kettner and his team note that the market is currently oversold, showing the strongest buy signal since June 2022 based on their overall sentiment and positioning indicators. Short-term sentiment, positioning, and technical indicators are also at levels not seen since March 2020.
Kettner plans to use any rebound as an opportunity to prepare for the next downturn, highlighting high uncertainty related to tariffs and the Federal Reserve's reluctance to rescue the market through the so-called "Fed put." He suggests that the market is likely to resume its decline once negative surprises in hard data emerge, or if US companies begin to cut guidance during the first-quarter earnings season.
HSBC favors US tech stocks over small-cap stocks, expecting tech to benefit from both rebounds and further corrections, while small-cap stocks may face more profitability concerns.
