Patience 'could be a virtue' in current market: Strategist

After last week's tech-heavy sell-off, many investors took the opportunity to buy the dip. Slatestone Wealth chief market strategist Kenny Polcari joins Catalysts to discuss the current state of the equity market (^DJI, ^IXIC, ^GSPC) and how investors can best position their portfolios heading into 2025.

"I think you have to take a broader look at where we think the market's going over the next six or seven weeks, just because we're in that seasonally weak time in the market, August through October. I think that the August lows of 5,116 [for the S&P 500] are likely going to be tested again, which means that as a long-term investor, you just need to be a little bit cautious," Polcari tells Yahoo Finance.

He points to Nvidia (NVDA) as a buying opportunity since shares are down about 25% since its June high. He does not expect the stock to rally back up to its high, but rather, he sees it as "on sale" for long-term investors.

"Now, if you're worried about further downside for the broader market and you think it's going to get dragged with it, well then just sit back a little bit and wait. I think, you know, for most of the clients, that's the conversation I'm having, just about being patient, because patience, in this case, could be a virtue," he adds.

Polcari argues, "We're at the very infancy stages of AI. I think Nvidia sits at the nexus of this tech revolution that's happening." He expects more volatility in the stock as the AI race continues. However, in the long term, he views Nvidia as "a core name and a core portfolio."

As the consumer discretionary sector (XLY) leads the market's charge for a rebound in Tuesday's trading session, Polcari is more bullish on consumer staples (XLP): "I think we're already seeing consumers run into problems. We're seeing people live on credit cards, and discretionary is just that — it's discretionary spending. Those are wants versus needs. So I would be cautious on that sector at the moment, and I'd be more focused on the staples sector. While it's boring... I think it plays nicely in an environment where you think it's going to be a little bit of a pressure on the broader market and on the consumer."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl

Video transcript

Our next guest saying that the dip buyers came in for the sale yesterday.

But will the buying continue joining us?

Now we've got here on set.

Live In Living Color, Kenny Polcari Slate Stone Wealth Chief Market Strategist.

Great to see you here, Kenny and thanks for taking the time.

So as we're thinking about some of the dip buying opportunities that some investors are trying to take advantage of right now, what, what are you kind of lining up and where you would be putting additional chips on the table?

So I think you have to take a broader, a broader look at where we think the market's going over the next six or seven weeks just because we're in that seasonally weak time in the market.

August through October.

Um I think that I think that the August lows of 5160 you are likely going to be tested again, which means that, you know, as an investor, as a long term investor, you just need to be a little bit cautious but look na key names NVIDIA that's down 25% off its June high is a place that I would actually be putting I would put money to work there.

Now, do you think it rallies back to the high?

Well, I don't think it rallies back to the high but I think it's on sale 25% as a long term investor.

I'm not a trader, so I'm not looking for it to rally 232 point or 10 points and then sell it.

I'm in there to buy it to hold it right.

But when something goes on sale at 25% down off the recent high, then you have to at least look at it.

Now, if you're, if you're worried about further downside for the broader market and you think it's gonna get dragged with it, well, then just sit back a little bit and wait, I think, you know, for most of the clients, that's the conversation I'm having uh uh just about being patient, right?

Because patient in this case could be a virtue, Kenny.

What do you think the outsized influence this is going to be for NVIDIA looking forward for the broader market?

Can I bring that up because we were talking to city's uh Scott Kroner earlier in the show and he was talking about that shift that we certainly have started to see over the last couple of months.

Does that continue?

Yeah.

Uh Listen, I think, I think it's a little bit overdone that shift that everyone's worried about.

Look II, I think we're at the very infancy stages of A I, I think NVIDIA sits at the nexus of, of this tech revolution that's happening.

Uh NVIDIA for me is a key name right now.

Do I think there's gonna be fits and starts and is it's a high growth name?

So it's got lots of volatility.

Absolutely.

But over the long term, I think NVIDIA is just a core name and a core portfolio and I think investors have to take depends again on who they are.

What their time frame are they a trader looking the day trader?

Are they an investor looking for a good entry point to either add to or initiate a position?

We're looking at consumer discretionary this morning.

One of the leaders here and it's jousting with technology right now here, at least during today's trading session when we think about the consumer though right now, there have been flashing warning signs especially ahead of what is either gonna be a soft landing, a hard landing potential recession.

How should investors be thinking about the consumer with relation to some of that discretionary spending and the stocks that that will show up in.

So I'm much uh in this, uh to that point, I'm much more about consumer staples.

I am about discretionary because I think the consumer is stretched.

I think consumer is gonna run into problems.

I think we're already seeing consumers run into problems.

We're seeing people live on credit cards and discretionary is just that it's discretionary spending those are wants versus needs.

Right.

So I would be cautious on that sector at the moment.

Uh And I'd be more focused on the staple sector while it's boring and not sexy.

I think it'll, it plays, it plays nicely in an environment where you think it's gonna be a little bit of a pressure uh on the broader market and on the consumer.