This Market Could Be Saying ‘Buy in May’
$DIA, $SPY, $QQQ, $VXX
An “upside-down” market may bode well for U.S. stocks, according to JPMorgan (NYSE:JPM).
Established patterns look to be off in here, as bonds and equities move in tandem, stock prices climb along with volatility, shares fall despite strong earnings, and money flowed out of US equities during the time of the year inflows are usually the strongest.
All that means the standard advice of “Sell in May” should be converted to “Buy in May,” JPMorgan strategists Marko Kolanovic and Bram Kaplan wrote in a note Tuesday.
Systematic investors are likely to reenter the market after selling $300-B of equities this year if volatility can stay contained and the market makes modest gains, the strategists wrote.
They see 3-month price momentum likely turning positive early this month, which could result in as much as $50-B of buying by trend followers.
Volatility-sensitive investors could bolster their holdings by about $10-B a week.
Corporate buybacks are expected to pick up after earnings announcements, adding up to $20-B of inflows a week at their peak.
The strategists see risks including an uptick in volatility, a rise in geopolitical tensions or an escalation of protectionism that could fuel selling by long-term investors or keep buyers on the sidelines.
The threat of wild price swings or severe drop in liquidity has receded, and that the worst is over on political risks.
“We often hear from clients ‘there is no one to buy equities,’” the strategists wrote. “That is not correct.”
There are bids stacked up under this market, you saw the buying come in when the Buy marks were hit in the last 90 mins.
Tuesday, the major US stock market indexes finished at: DJIA -64.10 at 24099.05, NAS Comp +64.44 at 7130.71, S&P 500 +6.75 at 2654.80
Volume: Trade on the NYSE came in at 807-M/shares exchanged
- NAS Comp +3.3% YTD
- Russell 2000 +1.0% YTD
- S&P 500 -0.7% YTD
- DJIA -2.5% YTD
HeffX-LTN Market Indexes Technical Analysis
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