Could the U.S. Market Be Poised for a Rally?


In recent days and weeks, we’ve seen U.S. stock exchanges remain pretty calm and steady.

While some are suggesting that we’re about to see the bottom fall out due to mismanagement and trade concerns, others are looking at the market in a different way.

This morning at MarketWatch, Markets Reporter Barbara Kollmeyer is reporting on analyst sentiments that a rally may be ahead.

Citing the implosion of the bond market, Kollmeyer cites remarks by CrackedMarket blogger Jani Ziedins as suggesting that market wisdom can be elusive and that the bulls may still be able to run.

“Equities are holding pretty steady for Thursday, as investors keep one eye on trade talks in Beijing and take in some fresh economic data,” Kollmeyer writes. “Despite all your best worries, the S&P 500 is about to close out a rock-solid quarter, with a near 12% return set to mark the best three-month performance since March 2012.”

In developing today’s market narrative further, Kollmeyer also includes remarks from Ajay Rajadhyaksha, head of macro research and Michael Gavin, head of asset allocation research at Barclays, which present an interesting take on the short-term future of the markets.

Suggesting that current concern about the world’s economy will “calm down” the two analysts, in a recent reported note, suggest this may drive investors “out of safety and into risk assets including equities.”

“We suspect that such a ‘flight from safety’ will provide a window of opportunity for equity market outperformance and recommend that tactically inclined investors should position for it,” the two reportedly told clients in recent days.

We assume that by “tactically inclined investors,” Rajadhyaksha and Gavin are referring to those with good core positions and advantageous cash holdings. Many of the more prudent investors will always hold cash and look for a fire sale before a rally. But not all analysts are as sanguine about even the short term. We’ve heard notable experts in recent months talking about market corrections and an overextended set of U.S. exchanges. And as we’ve seen (in 2008, for example) there’s always the possibility of overheated markets wearing down, bubbles bursting and big finance beasts suddenly collapsing onto the carpet.

Scope the short-term U.S. market out for yourself – but be careful – be very careful.