Veteran trader says market bounce may be the bottom
The market rally may mean the beginning of a move back higher for stocks, veteran trader Jack Bouroudjian told CNBC.
U.S. equities moved higher on Monday, after suffering their worst Thanksgiving week since 2011.
Bouroudjian, chief economist and co-founder of UCX, said the market action felt slightly different on Monday.
“We didn’t see that large strategic asset allocation, which was pressing and trying to hurt equities and buying fixed income pretty much all day long,” he said on “Closing Bell.”
“It might be that we have seen the bottom, at least short-term bottom. And quite frankly, people talk about bounces — they are bounces until you look in the rearview mirror and realize that it’s a bottom.”
A sell-off in tech stocks and oil prices helped send stocks lower last week. Plus, concerns about rising interest rates and a possible global slowdown, as well as lingering trade war fears, have been weighing on investors.
This week, the G-20 summit in Argentina will bring politics and trade issues back into focus. The meeting of world leaders will bring together President Donald Trump and Chinese President Xi Jinping, who have been engaged in an escalating tariff battle.
Bouroudjian, a CNBC contributor, said the bar is so low now that any type of trade progress will be better than nothing.
“We’ve had so much Armageddon priced into the market over the course of the last month that the market is now starting to realize that valuation is a question,” he said. “Unless you think that we’re going to see earnings just fall off the side of a cliff next year, we’re trading cheap. We’re trading at 14, 15 times next year’s forward earnings.”
Randy Warren, chief investment officer at Warren Financial, said he isn’t necessarily calling the bottom right now but it is “near.”
Plus, he said the risk-reward ratio looks very positive.
“We already know what the risks are. We already know what the trouble spots are in the marketplace,” he told “Power Lunch.” “We’re probably sitting at about a 5 percent down risk and 20 percent up risk over the next six months.”.