Mixed Strategy for Asset Classes This Summer

Oppenheimer’s take is that the current crisis creates an opportunity to buy Europe. The Oppenheimer technical analysis team showed that certain classes and sectors are worth nibbling at based on weakness. They said:

The S&P 500 appears poised to open at or below 2068 support this week, but we’re encouraged about cyclical leadership trends and a marginal improvement in the number of NYSE stocks reaching net new 52-week highs last week. US economic surprise data are also improving from a depleted level and giving buyers a reason to defend key 2040 support in the coming weeks to months, in our view.

There are other key metrics to consider as well. The Oppenheimer technical analysis team highlighted buying Europe, biotech and the SMID-cap consumer discretionary category. On the other side of the coin, they said to sell small-cap and mid-cap utilities. The team showed the following:

• Buy Europe: We recommend buying the EURO STOXX 50 down to 3400 support because we’re encouraged about the development of a long-term relative base vs. the MSCI World Index.
• Buy Biotech: Since 1990, Biotechnology has averaged a 9.9% relative gain vs. the S&P 500 in Q3. We recommend buying the iShares Biotech ETF (IBB) into its $357-$368 support range.
• Buy SMID-Cap Consumer Discretionary because the sector is breaking higher on a relative basis.
• Sell SMID-Cap Utilities — because the sector continues to break down on a relative basis.

Again, this is one of those situations in which beauty is in the eye of the beholder.

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