There’s a decent probability that the S&P 500 index won’t slip meaningfully below the 3,810 support, says Mark Newton. He’s the Global Head of Technical Strategy at Fundstrat.
Yields should start to come down
Newton sees several reasons why U.S. equities are unlikely to make a new year-to-date low even with the Fed’s policy meeting scheduled for next week. On CNBC’s “Fast Money”, he said:
The sell-off in the last few days has been driven by the dollar and yields moving back up. Now, both are near a critical resistance and I think they can hold into the Fed meeting and yields should start to back off in the months to come.
The benchmark index ended the week down more than 5.0% after worse-than-expected CPI print for May.
Invesco RYT is positive
Another reason why he’s confident there isn’t much of a downside in SPX from here is because the tech space showed signs of improvement over the past few weeks. Mark Newton added:
SPX can hold because technology has done better in the last month. If you look at equal weighted technology and strip out the FAANG, Invesco’s RYT is positive over a rolling one-month period. Tech as a broader group has done a bit better.
Despite uncertainty, JPMorgan analyst Dubravko Lakos continues to believe the S&P 500 index will end the year at 4,900 level.
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