Neptune’s Felix Wintle anticipates a Q4 US rally despite the market having moved up 50% since March.
Wintle, investment director and head of US equities at Neptune, says with the market having moved so far there is a strong case to be made for a market correction of some kind.
However, he says the more likely outcome is for the market to consolidate, i.e. to go sideways for a while then move up from there, culminating in a Q4 rally.
"The main reason for this is most managers have missed the majority of the rally; we discern this from the high level of cash on the sidelines and the still cautious tone coming from most of the sell side research houses," says Wintle.
"In order for the rally to come to an abrupt end I believe we need two factors to come into play. The first is the market needs to have much broader participation and a consensus bullish outlook and secondly the macro data needs to deteriorate."
Wintle says the macro data coming out of US, China, Europe and Japan will continue to beat expectations and corporate earnings will also continue to surprise investors to the upside.
"These factors support our view that the most likely direction for global stock markets is up for the remainder of 2009," adds Wintle.
Wintle currently has the £264m US Opportunities fund broadly neutrally positioned across all sectors, with overweights currently in healthcare, materials and industrials. He is also looking to invest its 9% cash position over the next few weeks.
