UBS technical analysts have presented a cautious outlook for equities in the first half of the upcoming year. Their analysis indicates an anticipated downturn in US and global equities, foreseeing a cycle top as part of a 2-year cycle.

Key Projections:

• S&P 500 Projection: UBS technical analysis suggests a potential decline in the S&P 500 (SPX) to the range of 4000/3800 by the third quarter. This bearish stance aligns with their broader economic forecast, anticipating a possible hard landing for the US economy in 2024. They warn of underestimated risks concerning a synchronized economic downturn in the US, China, and Europe.

• Missing Economic Cycle Phase: Analysts highlight the absence of the 'bust phase' in the ongoing economic cycle, emphasizing the overstimulation cycle stemming from Covid.

• Anticipated Cyclical Bull Market: Despite the bearish near-term perspective, UBS envisions a new cyclical bull market emerging post the Q3 4-year cycle bottom, extending into 2025/2026. This cautious stance aims at a potential buying opportunity later in the year.

Specific Stock Forecasts:

• Nvidia (NASDAQ:NVDA) Concerns: UBS expresses bearish sentiments towards US mega-cap stocks and specifically highlights significant risks for Nvidia shares, projecting a possible 20% to 30% correction in the first half of 2024.

Other Market Predictions:

• Bullish Stance on Gold, Dollar, and Yen: UBS technical analysts express bullish sentiments towards gold, the dollar, and the yen. Shorting EUR/JPY is highlighted as a key pick for 2024.

• Tactical Bullishness on Bonds: UBS expects US 10-Year yields to reach 2.70% by the second half, setting the stage for a higher yield bottom and the commencement of a new upcycle into 2025.

This cautious outlook on equities, coupled with specific forecasts for tech stocks like Nvidia, aligns with UBS's overall strategy to navigate the anticipated economic shifts and opportunities in the upcoming year.