A bearish trend signals that stocks are sensitive to a correction of 10% to 15%


The market seems to be doing something that happens before corrections.

When is S&P 500,, Nasdaq i CBOE instability index together, Julian Emanuel of BTIG warns that this is often a precursor to a 10% to 15% return.

“Whenever we saw it go back to the beginning of 2018, we were essentially a few weeks away from the correction,” the company’s chief strategist for capital and derivatives told CNBC.Trading Nation“on Monday.” The latest is last September. We think history could really repeat itself. “

According to Emanuel, the bearish trend has been occurring for several months.

“You could go back to 4,000 [on the S&P 500],” he said. On Monday, the index fell 0.18% and closed at 4,387.16. The S&P 500 has grown by about 17% this year.

Emanuel suggests that growing fear of the Covid-19 delta variant during a seasonally difficult period for stocks creates a more precarious situation.

“Four or five weeks ago, we weren’t very worried about the delta variant,” he said. “It simply came to our notice then [economic] the expected growth could be a little slower. “

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Still, Emanuel, a long-term bull, believes short-term troubles are healthy because they would give the market a key refreshment.

“His leadership was too concentrated,” Emanuel said.

His worries are mostly about a handful of big hats and Big Tech stocks.

“According to these estimates and as much as these stocks have been ongoing, they are actually vulnerable in our view, especially given the potential for China, as a substitute for the future,” Emanuel added.

‘China looks very interesting as a contradictory show’

Despite reservations about investing in U.S. companies with significant exposure in China, Emanuel would not completely ignore that either.

“Buying China here is not an idea for people with weak hearts,” he said. “The options market in particular sends a message of almost panic that we saw at the bottom of the pandemic trough.”

Beijing was suppression of Chinese stocks listed in the US. At the “Trading Nation” last month, economist Stephen Roach, who was president of Morgan Stanley Asia, warned that stocks were signaling the first stages of the Cold War.

However, Emanuel believes China could be worth gambling for investors. He notes that it is trading at the cheapest level in relation to the USA in the last 25 years.

“China looks very interesting as a contradictory game,” Emanuel said. “There’s definitely an opportunity out there that could actually come at the expense of these Nasdaq stocks that have been flying so high in recent months.”



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