Wall Street firm Cantor Fitzgerald is forecasting a short-term boost for the stock market in the next one to two weeks.
A Temporary Bounce?
Despite a generally gloomy outlook on the equity market, macro strategist Eric Johnston believes a 3% to 5% rally is likely. He acknowledges a slowing economy and high uncertainty but points to several factors supporting his prediction.
Technical Indicators Point to a Rally
Johnston cites several technical indicators to back his claim:
- Relative Strength Index (RSI): The RSI has dipped below 32, a level historically associated with strong rebounds.
- VIX Curve (Volatility Index): The inverted VIX curve signals heightened fear in the market, another indicator often preceding a rally.
- Seasonality: Favorable seasonal trends are emerging.
- Investor Positioning: Systematic and hedge funds have likely already completed their selling, reducing further downward pressure.
- Federal Reserve (Fed) Expectations: Cantor Fitzgerald anticipates a dovish stance from the Fed next week, further contributing to a positive market shift.
Market Losses and Looking Ahead
It’s worth noting that the US stock market recently experienced significant losses, shedding $5 trillion in value over the past three weeks. However, Cantor Fitzgerald’s analysis suggests a temporary rebound is on the horizon. This prediction is based on technical analysis and should not be considered financial advice. Investors should always conduct their own research before making any investment decisions.
