The S&P 500 Index enjoyed its best week since the summer highs in June. In the opinion of Morgan Stanley economiststhe recovery could last until the area of 400/4,150.
The door is left open for a trade to the upside
“Given strong technical support just below current levels, the S&P 500 may continue to rally towards 4,000 or 4,150 if there is no capitulation by companies on 2023 earnings guidance. Conversely, if interest rates remain at current levels there is no chance that this rally in equities will go beyond current prices therefore we remain tactically bullish as we head into what is likely to be a season careless earnings.”
“We simply are not confident that there will be enough capitulation on 2023 earnings to drive 2023 earnings-per-share forecasts lower in a way that takes values to new lows. Instead, our base case is that that It happens either in December, when holiday demand fails to materialize, or during the fourth-quarter earnings season in January and February, when companies are forced to forcefully discuss their 2023 prospects. In the meantime, let’s enjoy the recuperation”.
Source: Fx Street
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