22.06.2022 – The bulls breathed a short sigh of relief: Recently, prices on Wall Street started to rise again. Just a bear market rally? Or a turnaround after all? For traders, it doesn’t matter. For investors, however, it does. For both, the arguments for and against the turnaround are interesting. We take a look behind the scenes.
Investors are already taking cover again. Yet the 50-day line in the S&P 500 continues to beckon. At some point, a return here should occur. So the bulls continue to lurk for the rebound. By the way, the previous week’s loss in the SPX was the highest since March 2020. If everyone has sold – who should still press the sell button?
Goldman Sachs, by the way, provided an explanation for last week’s sell-off. According to the Prime Brokerage department, hedge funds were selling off assets in a big way. And in a really big way: never before had so many dollars been turned over, the volume was higher than in the Lehman crash of 2008. Whereby it should be noted that Goldman’s data only goes back to April 2008. We think: This actually sets the stage for a strong countermovement.
Buying at the end of the month
So where do we go from here? JPMorgan’s strategy department now sees the possibility of a broader rally. Among other things, because of purchases at the end of the month, which could flush more than 100 billion dollars into the stock markets worldwide. We add: We also have quarter-end, which is when mutual funds deliver their reports. Fund managers would have some explaining to do if cash ratios are high. Ergo, they could get in now, especially after the setback.
Impending recession
And now the dissenting voice: Michael Wilson, chief investment officer at Morgan Stanley, sees the market as more fairly priced with the recent sell-off. However, the risk of a recession is still not priced in. And that means the S&P 500 could still very well dip as low as 3,000. In other words, the bear market will not be over until either the recession has arrived or the risk of an economic crisis is involved.
We hope that you make the right decisions in this mixed situation – Bernstein Bank stays on the ball for you!
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