The best way to weather the extreme volatility in financial markets right now is to sell on stock rallies, said Jeffrey Gundlach, CEO of DoubleLine Capital, especially when the S&P 500 hits a certain level. “The best strategy is to minimize the risks to the force,” Gundlach said on CNBC’s “The Closing Bell” Monday. “Markets are so volatile, so big of a move that it’s almost impossible to sell on weakness. Markets are going from kind of pulling back in the mines and that’s true in the credit markets and I think it’s true in other risk assets as well.” Volatility has 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 on Monday, adding pressure to technology names. “When I say volatility, it usually means lower. We’re in a gap here,” Gundlach said. He believes that if the S&P 500 rises to the 4,200-4,300 range, it would be a good place to sell for investors. The large-cap index remains in the green for the month, trading around 3983 on Monday. .SPX YTD Mountain S&P 500 YTD “I think the stock going up to 4200, 4300 is again, an opportunity to reduce risk and that would go along with an appropriate opportunity to reduce lower levels of credit risk,” Gundlach said. . . “I am really negative about low credit quality bank loans.” The widely followed investor also said that there is more than a 50% chance that the Fed will raise interest rates in light of the banking chaos. The central bank raised interest rates by a quarter of a percentage point last week, while signaling only one more increase in 2023. Gundlach also stood by his call for recession, saying deflation would be upon us in a few months.
DoubleLine’s Jeffrey Gundlach reveals his trading strategy in this challenging market
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