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Our View

After a vicious three-week selloff that ended with 6 down days in a row, the ES has bounced 150 points from its lows on Friday. It's a simple question: Have the S&P and Nasdaq made a low? 

Remember, I'm always bull and looking for lows but not everyone agrees. JPMorgan's chief market strategist Marko Kolanovic wrote in a note on Monday:

“Price action may depend on earnings and could stabilize near-term, but beyond this, however, we think the sell-off has further to go. We remain concerned about continued complacency in equity valuations, inflation staying too hot, further Fed repricing, and a profit outlook where the implied acceleration this year might end up too optimistic." 

Kolanovic went on to say that "The current market narrative and patterns are increasingly resembling those of last summer, when upside inflation surprises and hawkish Fed revisions drove a correction in risk assets, but investor positioning now appears more elevated."  

I agree with part of this, but we all knew the Fed was wrong when they forecasted 3 rate cuts in 2024 and yes the markets got spooked as the public became increasingly pessimistic about the Fed cutting rates at the end of the summer in 2023. But I think the difference is it's an election year and the government is going to do everything it can to keep the stock market rolling — but that doesn't mean they won't be volatile.