David Bianco, the bullish Deutsche Bank U.S. equity strategist, has been especially optimistic on US stocks recently.Just last week, he argued that the next “5%+ move” on the S&P 500 would be up.
But in a note to clients this morning:
Withdrawing our call that Next 5%+ move is up from the current S&P 500 price
He views “S&P 500 reward vs. risk unattractive going into the weekend of Greek elections.”
Bianco writes of this new call:
Our decision is based on three factors. First, the S&P is within the 1325-1375 range that we consider tactically neutral territory for the summer – we advise positioning for small rallies if under 1325 and small dips if over 1375. Second, Greek elections are too close to call; even if Syriza beats New Democracy we do not expect an immediate Euro withdrawal or aggressive EU confrontation. Third, the latest US and global macro data has disappointed (Deutsche Bank shaved its 2012E US and China GDP) and the ongoing oil price decline below the ideal range for S&P EPS has made us nervous.
Bianco says that in order for the S&P 500 to revisit a level near 1400 in the short term, some of these things need to reverse: oil prices need to rally, we need to see better economic data, and the political situation in Greece needs to stabilise.
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