Not the Time to Be Adding Risk, Strategist Says

It looked a little dicey there earlier in the week when oil and commodities were falling apart and stocks and bonds were following suit. And yet, the S&P 500 battled back and looks set to post its third weekly gain in the past four.

Is the worst behind us? Our moment of madness over? The crude and silver debacle done with? Truth is, nobody knows, but in the absence of a sharp sell-off that breaks support and the uptrend (S&P at ~1330), this rally is intact.

"It's probably not the time to be adding to your risk position" says Chris Sheldon, the Director of Investment Strategy at BNY Mellon, "but you also don't want to get too beared-up." Sheldon is expecting a few choppy months ahead, but with a little patience and solid equity fundamentals (e.g. sales growth, margins), stocks should do alright.

While the recent volatility in oil prices and energy stocks have roiled markets, Sheldon says the day will come when cheaper oil and gas will be helpful again as investors come to reflect on the obvious benefits they bring to consumers and the economy.

"Pump prices rocket up but parachute down" Sheldon quipped, adding that high gas prices were starting to put a damper on demand.

It's not precisely a "sell in May" call, but it is a warning that the next few months will likely face bouts of the 3 C's: conflicting data, contagion and crosswinds.

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