Only a Recession Will Make Bulls Stumble, Analyst Says

Rod Smyth, chief investment strategist for Wachovia Securities, told CNBC’s “Morning Call” that he believes only a recession will end the current bull market.

“I think it’s all about when this economic cycle finally gives back and investors start to smell or sense a recession,” Smyth said Monday.” I think that’s going to be the moment when the bull market comes to an end … If we’re in a mid-cycle slowdown that allows inflation to come back down, I would go so far as to say the end of the bull market could be years away. But we won’t know that for a while. I think the important thing is that the primary trend is up. I think the market is going to grind its way higher.”

He said now is a good time for investors to re-balance their portfolios.

“I think this is a great time to rebalance portfolios and get more in the growth camp, because as the U.S. economy slows, and I believe it will continue to slow, growth earnings are less vulnerable to that slowdown,” Smyth said.

Paul Schatz, president of Heritage Capital, said he believed the Dow Jones Industrial Average will top out somewhere between 13,500 and 14,000, the S&P 500 will climb toward 1,600, and the Nasdaq will reach about 2,700 before the end of summer.

“By sector, I think semiconductors offer the best risk-reward,” Schatz said. “They’ve been essentially dead money since the middle of last year. Semis, I think, can go 10% to 20% by mid-summer. On a momentum basis, I look at telecom, utilities and basic materials. These stocks have had big runs and there’s more to come.”