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They are out of luck, says Goldman Sachs



Missed January's stock market rally? Well, then you probably missed the bulk of 2019's best gains, say strategists at Goldman Sachs.

The main U.S. benchmarks lasted a month ago, after stretching with a stretch that took hold in October and culminated in a brutal beatdown of bullish investors on Dec. 24 — Mark the worst decline on the session immediately before Christmas on record.

However, from that low point, the Dow Jones Industrial Average

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     DJIA, + 0.61

%

has climbed 16.5%, the S&P 500 index

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     SPX, + 0.35%

has ascended by about 16.3%, the Nasdaq Composite

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                    COMP, + 0.64%

has surged at 19.3%, while the small-capitalization focused on Russell 2000

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     RUT, + 0.23%

has jumped by more than 20%, according to FactSet data.

Read: The Nasdaq is on the brink of escaping from bear-market territory

Also see: MarketWatch's snapshot of the market

Bounce at some point early in the year was likely, and if investors missed it would be at risk of missing the bulk of the returns for the year, ”wrote analysts at Goldman, including strategists Sharon Bell, and Peter Oppenheimer, in a research report dated Feb. 4.

"The rally we expected has been swiftly, and given this we see relatively modest returns on equities from here." Goldman said.

The strategists make the case argue that while December's nadir isn't likely to be retested soon, a period of “flat and skinny” trading ranges for equity markets is in the offing.

"This is why we see no reason to return to the December lows. But, while we saw a bounce in equity markets in 2019, we argued that this would be followed by the resumption of a flat & skinny trading range, with relatively low equity returns, ”the strategists said.

Goldman economists believe that current environment in the US, market by a Federal Reserve that may slightly more accommodating than it presented in December, will support growth outside of the US along with crude-oil prices

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     CLH9, -1.36%

which had declined sharply along with risk assets like stocks.

That backdrop should stabilize the sluggish global growth that has gripped much of the developed world and emerging markets like China, even if it does not result in a fresh rally for US. stocks.

In the flat and skinny environment, Goldman is bullish, or overweight, technology, particularly in the digital economy and business services sector, and upbeat on heath-care names.

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