This quant model says stocks will fall in November

Investing.com -- A quant model from BCA Research forecasts a downturn in global equities this November, the firm said in a note Friday, recommending an underweight position on stocks in favor of bonds and cash.

According to BCA, the model suggests that investors should anticipate weaker performance in equities through the month, which aligns with its current outlook that “global equities will weaken in November.”

At the sector level, the model is said to favor a defensive approach within the U.S. market, with a focus on utilities, health care, real estate, and IT.

For regional allocation, the model maintains a preference for U.S. equities over international stocks, suggesting they may hold up better than those in other markets as volatility persists, according to BCA.

In terms of broader asset positioning, the firm explains that the model cut back its duration recommendation further in October, maintaining a neutral stance on duration for November.

The U.S. dollar is expected to move “sideways to slightly stronger,” signaling that currency markets could see limited fluctuation.

For commodities, the model remains neutral on oil, indicating it expects limited upside, while it recently downgraded copper to “underweight” due to a softer demand outlook.

Gold remains one of the model’s preferred assets, although BCA notes that the enthusiasm around gold has tempered slightly.

Overall, BCA’s quant model leans towards a more cautious strategy this November, emphasizing safer assets like bonds and cash as markets brace for potential declines in equities.

Source: Investing.com