This article was penned by CAPIS
Last week we held our March research call, featuring Katie Stockton, founder of Fairlead Strategies. Stockton, a regular speaker on CAPIS research calls, is a renowned technical analyst who appears frequently on media outlets like CNBC.
Our own Ed O’Dowd, Senior Vice President, Institutional Sales, started the call with an update on the day’s market activity – noting that despite pressure on the equities market, investors were still eager to purchase stocks (but with an eye to specific sectors). Furthermore, O’Dowd said that the Federal Reserve’s recent two-day meeting was now in the market’s rearview mirror without interest rate policy change, and that was a positive for stocks.
Fairlead’s Stockton began her presentation by examining the market’s bearish moves in light of the spike in U.S. Treasury yields, saying that despite stocks suffering from a short-term oversold bias, the market remains solid moving forward. “We see long-term momentum to the upside continuing” for stocks, she said.
This forecast for long-term strength, she added, will be supported by a continued decline in volatility (as measured by the VIX).
“The market can avoid a ‘big’ correction in a lower volatility regime,” Stockton said.
But one item of worry for her is the continued upward movement in U.S. Treasury yields. “Treasury yields have room for more upside…ratcheting higher as momentum is strong with more room to go.”
Equities cannot overlook rising yields forever, she concluded.