However, recent momentum for market does appear to have nudged one of Wall Streets most bearish strategists to ease up a little on the gloom. Our call of the day returns to Mike Wilson, the Morgan Stanley strategist who two weeks ago warned that investors had pushed stocks into a death zone.
In a new note, the strategist points out how the S&P 500 (SPX) survived a crucial test of support last week by staying above the widely-watched 200-day moving average. Stocks could see some further gains in the short term if the dollar and interest rates continue to pull back, he said.
Wilson has targeted 4,150 as the next resistance area for the S&P 500, though he still doesnt seem to be ready to give up on that death-zone prediction.
While this is an unequivocal positive in the short term, we believe it does not refute the very poor risk reward currently offered by many stocks given valuations and earnings forecasts that remain way too high, in our view, he said.
Wilson, who expects the S&P 500 will finish the year at 3,900 the more bearish end of Wall Streets wide-ranging forecasts warned in late February that investors had been following stock prices to dizzying heights once again, driven by liquidity and greed. He said pricey valuations meant investors werent being compensated for risk.
A bear capitulates!
Helene Meisler (@hmeisler) tweeted at 8:51 AM on Mon, Mar 06, 2023:
Morgan Stanley strategist Michael Wilson pivots on the short-term outlook for US stocks, saying the rally may have room to run
https://t.co/7Vz9fGQxdFvia @markets