- JPMorgan’s trading desk said the stock market flashed a tactical buy signal.
- This bullish signal suggests the S&P 500 index could rise 3% within the next 20 days.
- “This is very similar to the situation in late August, when the S&P rallied more than 3%,” JPMorgan said.
A tactical buy signal has flashed in the stock market, according to a Tuesday note from JPMorgan’s trading desk.
The buy signal suggests the S&P 500 could rise 3% over the next 20 days, which would bring it within striking distance of its all-time high.
JPMorgan’s Tactical Positioning Monitor measures positioning data within the stock market and detects when short-term positioning has declined significantly and rapidly, or when positioning has increased while the stock market is still below recent peaks. flashes a buy signal if
JPMorgan’s tactical buy signals have a proven track record, with the strategy generating an 8.9% annual return with a 69% trade win rate from 2015 to 2021. Additionally, buy signals tend to generate a 3% return over the subsequent 20 years. The bank said Sunday was triple the 1% increase that occurred in all other periods.
The latest buy signal came after positioning data showed a sharp decline amid a 5% decline in the overall stock market this month.
“Our US Tactical Positioning Monitor has just reached the threshold for an attractive setup for the S&P 500 index, based on the fact that it has fallen to -1.5z over the past four weeks,” JPMorgan said. “The last time this level was reached was in late October 2023, and the current situation looks similar to that around the lows in late August 2023, when again there were attractive conditions. It was caused.”
However, JPMorgan’s trading desk acknowledged that bullish buy signals alone are not enough to lift the stock market.
Rather, for this latest buy signal to be successful, companies need to achieve first-quarter profits and geopolitical tensions need to subside.
“To state a fairly obvious point, whether we can sustain the recovery we saw earlier this week will likely depend on the lack of earnings and growth/geopolitical instability. However, the recent decline and If the position continues to be reduced, there is a good chance of a rebound,” JPMorgan said.
JP Morgan
