27 Mar DoubleLine’s Jeffrey Gundlach reveals his trading strategy in this tricky market
DoubleLine Capital CEO Jeffrey Gundlach said the best way to navigate the extreme volatility in financial markets right now is to sell into equity rallies, particularly when the S & P 500 reaches a certain level. “The optimal strategy is to reduce risk on strength,” Gundlach said on CNBC’s ” Closing Bell ” Monday. “The markets are so volatile, so much movement that it’s almost impossible to sell on weakness. The markets just go from a mineshaft type of decline and that’s true in the credit markets and I think it’s true in other risk assets as well.” Volatility exploded in recent weeks amid an ongoing global banking crisis as well as shifting expectations for monetary policies. The S & P 500 is now on a three-day winning streak, but Treasury yields rebounded dramatically Monday, putting pressure on technology names. “When I say volatility, it usually means down. We’re in a hiatus here,” Gundlach said. He believes if the S & P 500 rises to the range between 4,200 and 4,300, it would be a good place for investors to sell. The large-cap equity benchmark is still in the green for the month, trading around 3,983 on Monday. .SPX YTD mountain S & P 500, YTD “I think stocks going up to 4,200, 4,300 is once again, an opportunity to reduce risk and that would go along with probably a decent opportunity to reduce lower tiers of credit risk,” Gundlach said. “I’m really negative on lower credit quality bank loans.” The widely followed investor also said there’s a more than 50% chance that the Federal Reserve is done with rate hikes in light of the banking chaos. The central bank raised rates by a quarter percentage point last week, while signaling just one more increase ahead for 2023. Gundlach also stood by his call for recession, saying a downturn will be upon us in a few months.