Mar 24 2016, 06:06 ET | By: SA Eli Hoffmann, SA News Editor
UBS technicians
Michael Riesner and Marc Muller, who called both of the most recent
selloffs, are out with a note telling clients to take profits on the
S&P 500:
"Last week, we saw the suggested
overshooting into expiration and the SPX reached the upper end of our
projected late Q1/early Q2 target at 2050, which leaves the short-term
picture in the U.S. unchanged as to what we highlighted last week. With
the rally of the last few weeks and looking at our daily trend work, the
SPX has reached its most overbought position since 2009!! Together with
significant non-confirmations in our medium-term momentum work, and
trading in the time window of our late Q1/early Q2 top projection, we
see the market vulnerable for a significant reversal this week, which we
would see as the beginning of a tactical top building process and
subsequent correction into deeper Q2. We reiterate our last week’s
comment and would not chase the market on current elevated levels.
"After
being aggressively oversold, we saw the February 11th risk bottom as
the basis for a multi-week bear market rally in global equities into the
late March/early April timeframe with a price target 2000/2050 in the
SPX before starting a new significant tactical down leg into deeper
summer. Last week, we said that a final overshooting into expiration is
still likely, but particularly in the week after triple witching we very
often see important tactical trend reversals in the market.
"The
February/March rebound was nearly vertical, which is not sustainable.
With last week’s extension our daily trend work has reached its most
overbought position since 2009. Together with our weekly momentum
reaching overbought extremes we have a relatively high likelihood of
seeing the market move into an important medium-term top followed by a
significant setback. Even if our big picture market view (U.S. and
global equity markets are in a cyclical bear market that we expect to
continue into Q1 2017) proves to be too bearish, with such an indicator
setup we should see the US market minimum ahead of a multi-week
consolidation pattern, where we should see higher volatility and
therefore a significant pullback."
The following charts were taken from the last article on this blog
By UBS technicians
Michael Riesner and Marc Mulle
Link to that article
http://www.zerohedge.com/news/2016-03-23/one-most-accurate-forecasters-2016-sp-most-overbought-2009-sell
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