Short Nvidia stock is one of top technical ideas for 2024 at UBS

investing.com:

UBS technical analysts have a bearish outlook on equities for the first half of the next year, although they expect to see a buying opportunity moving in the third quarter (Q3) as part of the next regular 4-year cycle bottom.

Analysts say US and global equities are expected to complete a 2-year cycle top, their technical analysis shows.

This should see the S&P 500 (SPX) decline to the range of 4000/3800 by the third quarter. The broader economic outlook aligns with the anticipation of a hard landing for the U.S. economy in 2024, and UBS suggests that the market may be underestimating the risk of a synchronized economic downturn in the U.S., China, and Europe.

The analysts propose that the ongoing economic cycle is missing the bust phase of the Covid overstimulation cycle.

However, UBS envisions the Q3 4-year cycle bottom as the basis for a new cyclical bull market extending into 2025/2026. This analysis reflects a cautious near-term stance with the expectation of a potential buying opportunity later in the year.

In addition to the S&P 500, the analysts expect a major reversal in US mega-cap stocks. Along these lines, they see a major risk for Nvidia (NASDAQ:NVDA) shares.

“The Q4 NDX rally is a wave 5 of a larger degree and should complete the 2023 bull market in technology. We are bearish mega cap technology and would short NVIDA where we see the risk of a 20% to 30% correction in H1,” analysts said.

Elsewhere, UBS technical analysts are also bullish on gold and the dollar, as well as yen with short EUR/JPY one of the key picks for 2024.

“We are tactically bullish bonds, where we expect US 10-Year yields to hit 2.70% into an H2 low as set-up for a higher yield bottom and start of a new upcycle into 2025.”