Equities may remain in consolidation mode into November. Growth themes shall then lead the way up again into early 2021.
- The S&P500 shall continue to bounce into early/mid October, and thereafter consolidate down again into November. Downside risk towards 3’200– 3’000.
- From mid/late November, most equity markets rise again towards next Spring. Many could make new highs.
In such environment, we would probably favor Defensive equity themes from early/mid October into November, while equity markets continue to retrace, and would then switch to Growth themes from mid/late November into Q1 2021 as these should lead in the recovery.
- The Nasdaq 100 underperforms the Defensive US Staples sector into mid/late Q4, to outperform again into Spring 2021.
- Vs. the more cyclical S&P500, the Nasdaq may even start to outperform again from early/mid October, as Growth themes prove more resilient into November.
- Indeed, Cyclical factors such as the ratio of US Small Caps vs the S&P 500, US Treasury yields or the Copper to Gold ratio all seem to be resuming their downtrend into at least early 2021.