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A Q1 Pullback Appears Likely but Temporary

Coincidently, as I was preparing for this week’s note, I came across a quote from Peter Lynch, the legendary portfolio manager of Fidelity’s Magellan Fund between 1977-1990. Peter noted that “Far more money has been lost by investors preparing for corrections than has been lost in the corrections themselves”. I view this as sage advice heading into Q1 2021 as all us on the Fundstrat macro team assesses the risks facing investors early next year. If you are interested in more of Peter Lynch’s food for thought quotes they are readily available on the internet or at this link (click here)

As I noted here over the past few weeks, I am expecting a pullback in Q1 that is likely in the 7-10% range over a period of 2-4 months. I obviously cannot say for certain the exact date when the correction will begin, but my read of the technical data at this point is for further upside in January with a tactical peak developing early to mid-February. This week’s chart below outlines a likely roadmap through Q1.

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