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Bearish trends show that stocks are vulnerable to 10% to 15% corrections

The market seems to be doing something prior to the fix.

when S & P 500, Nasdaq And that CBOE Volatility Index Julian Emanuel of BTIG warns that it is often a precursor to a 10% to 15% pullback.

“Whenever we saw it back in early 2018, we were essentially weeks away from the fix,” the company’s chief equity and derivatives strategist told CNBC.Trading country“Monday.” The latest is September last year. We believe that history can actually be repeated. “

According to Emmanuel, the bearish trend has been going on for months.

“You can trade back to 4,000 [on the S&P 500],” He said. On Monday, the index fell 0.18%, ending at 4,387.16.. The S & P 500 has risen about 17% so far this year.

Emmanuel suggests that an increased risk of Covid-19 delta mutations during seasonally difficult strains creates a more unstable situation.

“Four or five weeks ago, we weren’t too worried about the Delta variant,” he said. “It’s completely possible [economic] The expected growth may be a little slower. “

Still, the long-term bullish Emmanuel gives the market a significant refreshment, so we believe the short-term problem is sound.

“That leadership was a little too focused,” Emmanuel said.

His concerns are mainly with the growth of a small number of large caps Big tech stock.

“In these assessments, and as much as these stocks were run, they are actually vulnerable in our view, especially given China’s potential as a future wildcard,” Emmanuel adds. I did.

“China looks very interesting as a contrarian drama.”

Despite his reservation of investing in a US company with considerable exposure to China, Emmanuel did not completely ignore it.

“Buying China here isn’t for the weak,” he said. “Especially the options market is sending a message close to panic as we saw at the bottom of the pandemic trough.”

Beijing has been Crackdown on US-listed Chinese stocks.. Economist Stephen Roach, who chaired Morgan Stanley Asia at the “Trading State” last month, warned that actions represent an early stage in the Cold War.

But Emmanuel believes China is worth gambling for investors. He states that it has been trading at the cheapest level in 25 years compared to the United States.

“China looks very interesting as a contrarian drama,” Emmanuel said. “There is certainly an opportunity to actually sacrifice these Nasdaq stocks, which have been very expensive leaflets in recent months.”

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Bearish trends show that stocks are vulnerable to 10% to 15% corrections

Source link Bearish trends show that stocks are vulnerable to 10% to 15% corrections

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