{"id":8237,"date":"2022-06-14T18:35:59","date_gmt":"2022-06-14T23:35:59","guid":{"rendered":"http:\/\/blog.jlbn.net\/?p=8237"},"modified":"2022-06-19T14:36:51","modified_gmt":"2022-06-19T19:36:51","slug":"strategist-who-nailed-the-recent-sp-500-top-says-three-things-are-needed-for-a-market-bottom","status":"publish","type":"post","link":"http:\/\/blog.jlbn.net\/?p=8237","title":{"rendered":"Strategist who nailed the recent S&P 500 top says three things are needed for a market bottom"},"content":{"rendered":"\n

Wariness is in order after the S&P 500\u2019s bear-market finish <\/a>and a potential 75 basis-point Fed hike just one day away. Gains for stock futures and a potential bounce are fading fast.<\/p>\n\n\n\n

Morgan Stanley\u2019s Mike Wilson, who can count some wins after pounding the table this year<\/a> over a gloomy stock setup, told clients on Sunday that the S&P is \u201cheaded toward 3,400 before a more tradable low is in.\u201d<\/p>\n\n\n\n

\u201cWith growth now the main risk to stocks, our focus remains on names that can deliver on earnings in a very difficult environment for many companies to navigate,\u201d said Wilson. \u201cWe continue to like classic late-cycle winners \u2013 defensives and energy \u2013 and companies with high operational efficiency.\u201d<\/p>\n\n\n\n

Also in the camp of prescient calls is The Kobeissi Letter\u2019s editor in chief and founder Adam Kobeissi<\/a>. In a June 6 newsletter<\/a>, (shared on this column) <\/a>he warned followers that 4,090 would mark a \u201cbattleground level\u201d for the S&P 500, and failing that was a clear path to 4,050.<\/p>\n\n\n\n

He had a stop loss set at 4,160, which marked the exact top for the index before the big pullback set in.<\/p>\n\n\n\n

Sharing his latest thoughts in our call of the day<\/strong>, Kobeissi returns with a warning of more medium-term downside ahead, and no stock bottom until we see some classic signs:<\/p>\n\n\n\n

\u201cAt a high level, we have yet to see a real VIX VIX<\/a> <\/strong>spike yet and panic selling has not set in year. Generally speaking, we do not see bear markets bottom without panic selling, similar to what was seen in 2001 and 2020,\u201d he told MarketWatch on Monday. \u201cHistorically speaking, no bear market has ever bottomed without a VIX reading of 45 or more.\u201d<\/p>\n\n\n\n

And possibly even a limit-down day on the S&P 500 would help build a bottom case, he adds.<\/p>\n\n\n\n

In the near term, he sees some modest signs of an oversold market that\u2019s trading below the 3,846 daily bottom Bollinger Band, with a daily RSI nearing 30.<\/p>\n\n\n\n

The Relative Strength Index, or RSI, evaluates whether an asset is oversold or overbought, with sub 30 indicating the former. The Bollinger Band is a momentum indicator<\/a> that also measures those conditions, along with market volatility.<\/p>\n\n\n\n

Kobeissi expects pressure on the S&P 500 until Wednesday\u2019s Fed decision, when \u201cbuy the news\u201d action may initially lift stocks, but \u201close-lose\u201d fundamentals will force selling of any rips. So a relief bounce into 3,860, or even 3,950 is possible before \u201cmore weak longs are trapped and we head lower toward 3,500.\u201d<\/p>\n\n\n\n

Indeed the Fed is in a tight spot, he says.<\/p>\n\n\n\n

\u201cIf the Fed raises rate aggressively, then markets fall on recession fears, and if the Fed pulls back on their hawkish tone then markets fall on inflation worries,\u201d said Kobeissi, adding that the central bank will \u201cremain pedal to the metal this week and for the rest of this year as they have no option.\u201d<\/p>\n\n\n\n

The buzz<\/h6>\n\n\n\n

Bank of America\u2019s just-published monthly fund manager survey has a few interesting bits, such as more investors than any time since the Great Financial crisis expect inflation will decline in the next year.<\/p>\n\n\n\n

FedEx shares FDX<\/a> <\/strong>are soaring after the package delivery company lifted its quarterly cash dividend by 53%<\/a><\/p>\n\n\n\n

Coinbase COIN<\/a> <\/strong>was set to extend a slide Tuesday after a J.P. Morgan analyst abandoned his bullish call in the wake of an \u201cextreme decline\u201d in cryptocurrency prices.<\/a><\/p>\n\n\n\n

Continental Resources stock CLR<\/a> <\/strong>is surging after the oil and gas exploration group got a proposal to be taken private by Harold Hamm<\/a>.<\/p>\n\n\n\n

Netflix NFLX<\/a> <\/strong>extended a recent sharp selloff<\/a>, after a Benchmark analyst turned bearish on the stock and set the lowest price target on Wall Street.<\/p>\n\n\n\n

Oracle stock ORCL<\/a> <\/strong>is climbing after results showed a shift of the tech company\u2019s business to the cloud was paying of<\/a>f.<\/p>\n\n\n\n

In a cautious note on IT hardware, Deutsche Bank cut its price target<\/a> for buy-rated Apple AAPL<\/a> <\/strong>to $175 from $200, also trimming Hewlett Packard Enteprises HPE<\/a> <\/strong>and NetApp NTAP<\/a> <\/strong>targets. HPE was cut to hold and NetApp was upped to buy.<\/p>\n\n\n\n

Nokia shares NOK<\/a> <\/strong>are up after Citi lifted the Finnish telecom equipment maker to buy from neutral and upped its price target to \u20ac6.50 from \u20ac6. Analysts said markets are ignoring improving fundamentals for the group.<\/p>\n\n\n\n

Elon Musk plans to directly address Twitter<\/a> TWTR<\/a> <\/strong>workers this week, the first time since the TeslaTSLA<\/a> <\/strong>CEO launched his $44 billion takeover for the company.<\/p>\n\n\n\n

Apart from the kickoff of the Fed\u2019s two-day meeting, a survey of small businesses showed confidence stalled in May<\/a>. And wholesale prices jumped again<\/a>, signalling still-intense inflation in U.S. economy<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Wariness is in order after the S&P 500\u2019s bear-market finish and a potential 75 basis-point Fed hike just one day away. Gains<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[254,3421],"tags":[888],"_links":{"self":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/8237"}],"collection":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8237"}],"version-history":[{"count":1,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/8237\/revisions"}],"predecessor-version":[{"id":8238,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/8237\/revisions\/8238"}],"wp:attachment":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8237"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8237"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8237"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}