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Do bovine bulls need a waiting period? Or even a nap?
In a note on Thursday, George Davis, chief technical strategist at RBC Capital Markets, said the rally that saw the S & P 500
SPX, + 0.16%
roaring back from the limit of a bear market to the limit of a record territory in less than four months has left the stock market looking "tired". The configuration calls for at least some caution in the short term, he said. Here is his candlestick chart, below:
RBC Capital Markets
"We are becoming more cautious in equity markets as the SPX moves closer to secular highs and valuations become a more pressing concern," Davis wrote, referring to the S & P index ticker. 500.
Thursday's winnings could, however, save some time. The S & P 500 finished on a gain of about 5 points, or 0.2%, close to 2,905.
Davis said that a daily close above 2900 could "delay the corrective potential and plead for a new test of secularism". [intraday] set to 2941 "set on September 21. Meanwhile, a daily close under support of the uptrend at 2,901 would leave 2860 as the initial target" in the course of a corrective phase ", with the next support layer At 2.785, a similar pattern at the beginning of March saw a 3.3% decline before the bullish trend resumed, he said.
After reaching an all-time high of 2,930.75 on September 20, a generalized fourth-quarter sell pushed the benchmark deep-cap, but stopped just in front of a bearish market – commonly defined as a drop of 20% over a year. peak. In a V-shaped rebound, the index was up 24% up Wednesday from its low on Christmas Eve and only 1% from its 20 September peak.
The Dow Jones Industrial Average
DJIA, + 0.42%
had a similar action and was up more than 21% from its December 24th low and only 1.4% from its October record of 26,828.39.
Although flow data and confidence surveys show that investors have become familiar with the market as it continues to grow, they have not yet entered the market. Citing an overabundance of uninvested cash, Larry Fink, Managing Director of BlackRock Inc.
BLK, -0.39%
the world's largest asset manager, warned earlier this week that a "merger" was a more likely scenario in the near term than a "merger".
See: Stock market "merger risk, no merger," warns Larry Fink of BlackRock
Read also: Dow, S & P 500 and Nasdaq are close to record, but stock volumes are low – here's why
Mergers, in which investors who fear losing their earnings are involved in binge eating, are often followed by brutal withdrawals.
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