What Investment Advisers Are Saying On the Dow's 871-Point Bounce

(Bloomberg) -- Wall Street mouths were again agape at the sight of frantic moves in equities. The S&P 500 climbed 3.8 percent from its lows, turning on a dime at about 2:20 p.m. in New York, while the Dow Jones Industrial Average swung 871 points straight up.

Here’s what investment advisers say they saw.

• Nancy Tengler, chief investment strategist at Tengler Wealth Management, which has around $450 million under management:

“There’s a couple of things going on: one is that the tax-loss selling is most likely done. People, like me, who try to do it for clients, tried to do it last week. That improves liquidity in markets. There’s buyers and typically what we see in a normal market if people believe the economy is sound and that earnings will be decent, is they’ll tend to buy the dip. We saw some of that today. There was no major news that prompted the reversal. And buyers tend to come in at the end of the day, especially with program buyers. That’s a lot of what we’re still seeing,” she said. “Some people said this is what bottoms look like. I don’t know if we are at the bottom yet. I’m not saying we’re not, but sellers are drying up because of tax loss harvesting and you have end-of-the-day buyers coming in. I had a sense we’d end up today, but you certainly never know.”

• Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance:

“Typically you look at the last hour of trading and see where professional money is. Yesterday the markets was up for most of the day, but we had a dramatic rally in the last hour of trading, and the same thing today -- it was flat for most of the day and then rallied in the last hour. It could be a lot of mutual funds and institutions buying. It does seem like a switch in sentiment -- from being a seller in every rally to buying the dips now.”

“We are seeing investors bringing the market pricing back in line with fundamentals. Over 90 percent of stocks in New York Stock Exchange traded higher on Wednesday - that was crazy, it made me think - maybe the bottom is in. Maybe it’s a very late Santa Claus rally. Being down 20 percent without a recession doesn’t make too much sense. Maybe people were waiting for the last minute and once we got really close to 20 percent they decided to buy. I wasn’t one of them, but after what happened yesterday I was. It looks like the bottom is in.”

• Gary Bradshaw, a portfolio manager at Hodges Capital Management.

I compiled a ‘To Buy in 2019’ list on December 7 and I just looked at it again - I couldn’t believe how much they’ve plunged since then. I said ‘That’s it, I need to buy,’ and so has everyone else. The market has turned the corner - fundamental are strong, the economy is doing well, the consumer is strong, the bull markets is still intact. It’s a screaming buy. Everything that could go wrong has gone wrong. The negative news is out there - and investors said, give me some positive news - a good holiday season for retailers, the absence of negative headlines on trade, and we’ll buy.

• John Carey, managing director and portfolio manager at Amundi Pioneer Asset Management

The market just got a second wind and decided to go up a bit in the end after having been driven down so much in the past few weeks. It was because bargain hunters are still looking for stocks that could do well next year if earnings do hold up and the economy stays reasonably strong. It’s been a real roller coaster ride. I normally expect calm markets and low volume during the last week of the year. You can have some more trading activity on New Year’s Eve because people are tidying up their portfolios and getting ready for the new year.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Elena Popina in New York at epopina@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Chris Nagi

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