One year after Covid-19 market bottom, Canaccord Genuity’s Tony Dwyer says stocks are in ‘no man’s land’ – CNBC

Canaccord Genuity's Tony Dwyer is temporarily dialing back his appetite for stocks.

On the one-year anniversary of the Covid-19 bottom, he's telling investors the market is in "no man's land."

"We're in this period where the Russell 1000 growth mega cap stocks aren't oversold anymore and the cyclical or economic recovery theme isn't extreme overbought anymore," the firm's chief market strategist told CNBC's "Trading Nation" on Tuesday."So, I don't really see a near-term tactical edge until we see some sign of an extreme that just doesn't exist right now."

Dwyer, who's bullish for the year, has been partial to S&P 500 groups tied to a strong economic rebound. But he notes those areas don't provide a good entry point right now for new money.

"The other part of no man's land is that economic recovery theme got so extreme that we actually even downgraded the financials [to neutral] last Friday," he added.

The KBW Bank Index, which tracks the performance of the group, is up 107% in the past year. So far this year, it has soared almost 19%.

Dwyer believes the gains face near-term trouble due to risks associated with economic growth.

"It's what made us downgrade the financials. You actually have long-term interest rates come down because the markets start thinking the global recovery may not be as rapid," said Dwyer. "The risk is not in our view right now higher interest rates and economic acceleration. That's what we want."

Dwyer may be on pause right now. But a day after the 2020 market low, he predicted a significant relief rally on expectations of massive fiscal and monetary support. The market was back at all-time highs before year's end.

"The SPX [S&P 500] has already dropped nearly 34% in under a month suggesting the panic phase should be nearly done based on the 14-week RSI [Relative Strength Index]," Dwyer wrote to clients on March 24, 2020. "Such extreme oversold readings have suggested the 'panic phase' of a crash was largely in the rear-view mirror."

On Tuesday, the S&P 500 closed at 3,910.52 a 79% gain from the March 2020 bottom. Meanwhile, the tech-heavy Nasdaq is up 93% in the same period and closed at 13,227.70.

"We still love the economic recovery theme. We have excess liquidity that is historic. You go into recessions and sustained bear markets when you have a need for money with limited access to it. The opposite is true today," Dwyer said. "We've never seen this level of global liquidity in the marketplace."

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One year after Covid-19 market bottom, Canaccord Genuity's Tony Dwyer says stocks are in 'no man's land' - CNBC