JP Morgan's Market Intel team are giving a 40% chance to the US stock market pulling back before resuming its trend higher. Up from their previous 35% probability.
JPM say that last week's fall does not constitute the pullback they are looking for, but concede they were looking for a bigger pullback in June before indexes rocketed higher.
In June JPM were looking for a deeper pullback citing:
- less rosy macro data
- the continuation of the tightening cycle
- earnings outlook
- and lack of incremental buyers
The analysts say that the first and second of those points above are most similar to now:
- With bottom’s-up earnings estimated higher in the medium term and buyback poised to turn back on, bullets (i) and (ii) would be the key similarities with the addition of positioning
I haven't got targets to the downside JPM is looking for.
