7% return of market share? According to Wall Street Bull, the 2009 ‘steer-step’ rally continues


That last stage was a doodle.

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The stock market’s September return was likely the first of many as it is the “stair-step” playbook that eluded the 2009 financial-crisis rally, a prominent Wall Street bull argued in Monday’s note.

“7% improvement in S&P 500 SPX,
+ 1.27%
In the past six trading sessions, the first decline is probably 3-7%, which is followed by a market boom, similar to the 2009 decline. Underweight index, ”said Tony Dwyer, chief market strategist at Canaccord Genuity.

After the S&P 500 and the Tech-Heavy Nasdaq Composite Comp,
+ 1.87%
Another round of record highs hit in early September, in a huge August rally, with stocks headed south as investors suddenly dumped high-flying, megacap growth stocks that were increasingly responsible for equity gains. .

Early last week, Nasdaq entered the correction zone, falling more than 10% from record highs in just three trading sessions. Its biggest drop was the index’s 4.5% weekly decline since March. The S&P 500 ended Friday with a weekly loss of over 2%, down 6.7% from its September 2 record. Dow Jones Industrial Average DJIA,
+ 1.18%
It dropped 1.7% last week. All three major indices hit the ground on Monday.

Dyer pointed to an August note on the theme, stating that a pullback for “economic recovery” shares in favor of “economic recovery” shares, which would benefit from an epidemic in the rear-view mirror, was expected was. The prospects for further volatility remain high as investors grapple with the rotation between sectors, the risk of renewed growth in COVID-19 cases and, most importantly, “the most complex electoral year setup we can possibly do.”

The election outlook is complicated not only by the uncertainty over who will win the White House or which party will control the House and Senate, but also by the potential controversy surrounding the voting process itself, and whether the party will concede defeat anywhere during the election The day. “

The Federal Reserve, by contrast, is more predictable, focused on with uncertainty as to whether it will continue to support the economy, but what tools it will use to do so.

Meanwhile, a 7% decline by the S&P 500 and nearly 11% by the Nasdaq helped bring back some key strategic indicators from the peak zone, Dwyer said, noting that the S&P 500 shares had a ratio of their 10- and. Above 50-day. The average had pulled back to 26% and 54% respectively (see chart below).

Canacord Genuity

Cboe Volatility Index VIX,
-3.79%,
There was a rise from 38 at the beginning of September, still up, but now trading near 26, he said, a 14-week stochastic indicator for S&P 500 futures historically read 98 Pulled back 68 from Reading. In addition, newsletter writers on Investors Intelligence reading investments remain high at 59%, but below readings of over 60% – a lagging indicator, it is likely to continue to decline even as equities bounce in the near future, Dwyer. he said.

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