‘We’re positive that it will be a good end to 2020,’ Ally Invest’s top investment strategist says

There may be more juice left in the fourth quarter.

Ally Invest’s Lindsey Bell said she believes the backdrop supports December gains.

“We’re positive that it will be a good end to 2020,” the firm’s chief investment strategist told CNBC’s “Trading Nation” on Wednesday.

Bell sees optimism surrounding another coronavirus aid package providing a near-term upside catalyst to stocks. She also cites resilient consumer spending as a driver.

But Bell, a CNBC contributor, acknowledges the gains may be lower than the historical average.

“December is usually the third-best month of the stock market. You usually see the S&P 500 up about 1.5%,” she said. “That might be a little more muted this year.”

While constructive coronavirus aid developments should help stocks, Bell warns it will also contribute to uncertainty regarding the size and timing.

“It could make investors a little bit nervous,” added Bell. “There will be some choppiness.”

Near-term, she sees mega-cap technology and high-flying stay-at-home names as most vulnerable.

“Some of those names really did get ahead of themselves,” she said. “I don’t necessarily believe they’re going to fall off a cliff. … A lot of the product and services that some of these companies offer have become part of our everyday lives.”

In this environment, Bell favors dividend aristocrats — defined as stocks that have paid and increased dividends for at least 25 years.

“They were up 12% in the month of November,” she said. “Not only do they outperform the S&P 500 on a long-term basis, but they do so in a less volatile manner. So, you’re building a nice diverse base by having some exposure.”

She said she believes divided aristocrats, which include a big portion of economically sensitive industrial and materials stocks, will continue to grab profits as growth recovers. According to Bell, the market is underestimating the bullish impact of the Covid-19 vaccines on the economy and earnings.

“There is a lot to look forward to in 2021,” Bell said.


Source: CNBC