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The equity backdrop remains positive as markets continue to trend skyward, defying so many traders and commentators overly focused on short-term indicators. That’s got to hurt. My expectation is that the intermediate-term, 1-2 quarter rebound that began in Q4 will start to peak somewhere in mid-late Q1 2020. Between now and then, shortterm pullbacks are likely to be shallow, short and not worth micro-managing.

Once the weekly momentum indicators begin to peak, I expect a broad choppy trading range to develop through Q2 into Q3. The technical picture also supports colleague Tom Lee’s fundamental view, outlined in his 2020 Outlook published this week. Part of it is available on page 3. As a reminder, Tom and I maintain independent views driven by different methodologies, but when they align, as they did throughout 2019, it’s usually a valuable signal for investors.

As the bull market adds upside momentum and participation broadens to more industry groups, from a tactical view many of 2019’s leading stocks are becoming advanced and less timely to be chasing. Sentiment indicators, such as the American Association of Individual Investors’ bullish readings, are climbing toward overbought levels. This suggests to me that investors should be looking at stocks that have a...

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