HSBC Says Stock Market All Clear for Year-End Rally – Calls November’s Sell-Off a ‘Non-Fundamental Dip’

A top analyst at banking giant HSBC says November’s market correction most likely handed bulls an opportunity.

In a new interview with CNBC, HSBC’s chief multi asset strategist Max Kettner says that the market dip last month made little fundamental sense, and brought many assets back into the “buy” territory” based on the bank’s metrics.

“What this correction has done in November, it’s brought back really a lot of our shorter-term positioning signals back towards a ‘buy’ territory. So a lot of short-term hedging going on. The VIX futures curve, put to call ratio option skews, all of those things really, we can go flashing and still be closer to a buy signal rather than a sell signal, so that really should mean all clear for a year-end rally…

We’ve been saying last week, look, this is exactly the sort of non-fundamental dip that you should actually be hoping for. In reality, when we speak to investors and they say ‘yeah, we’ve probably missed the rally a little bit, but we’re waiting for the dip and we’ll buy the dip…’

I think the worst dips are the sort of dips where you say, ‘Well it’s perhaps a reaction to… the reporting season or perhaps the earnings speed rates are much lower than expected, and then you start to question the fundamentals. Whereas when you look at it this time around… Are tech companies, are AI companies that are mostly A and AA rated, are they issuing already too much debt that makes fundamentally not a lot of sense?”