The Wall Street adage "Sell in May and go away" may not be such a bad idea, one strategist says.
With Monday’s pending home sales report and the April jobs report coming out Friday, CNBC contributor Gina Sanchez expects stocks to have a tough time ahead.
"I think that the markets right now have maybe a couple of things going for it and a lot of things going against it," said Sanchez, founder of Chantico Global. Though Sanchez says 2014 will see the best growth in the economy since the Great Recession, she sees signs of trouble.
There isn't a whole lot that the Fed could really do to boost it anymore," said Sanchez. "This bull market has gotten way long in the tooth and investors have been very cautious."
Among other things, according to Sanchez, investors are dumping small cap and momentum stocks with high price-to-earnings multiples and buying large cap value stocks and safe plays like utilities.
"I think the cons outweigh the pros for this market," said Sanchez.
Ari Wald, head of technical analysis at Oppenheimer & Co., agrees that the market has been bifurcated as exhibited by its recent choppiness. However, he's not as negative on the market.
"For me, the risk is that the trend begins to reverse sideways, not necessarily down," Wald said about the benchmark S&P 500 index. "So, I'm still a buyer before a seller."
Wald notes that the S&P 500's 200-day moving average is still sloping up, though he sees resistance around the 1,880 to 1,900 level. He says investors should prune their portfolios of worrisome names.
"I think you can maybe stop buying [and] sell the stocks that you're concerned about," said Wald. "Looking out, I think we get some greater volatility. I'd rather look to buy that volatility rather than try to anticipate it."
To see the full discussion on the S&P 500, with Sanchez on the fundamentals and Wald on the technicals, watch the video above.
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