Bank giant Morgan Stanley thinks that the S&P 500 is close to cutting a large market floor after the level of 5,000 points last week.
In a new CNBC interview, Mike Wilson, the CIO of Morgan Stanley and Chief Us Equity Strategist, says that the stock market was probably witnessed by a capitulation event on 7 April after falling a new layer of 2025 of 4,835 points.
Capitulation takes place when investors throw the towel in the towel because of maximum fear and panic, which leads to a competitive drop. It suggests that a market base is in sight, because sellers usually no longer have any assets to solve.
Wilson says,
“I think we’ve seen the worst of the momentum. We probably made the momentum low, the capitulating layer for this correction. Wherever it will be – whether it is 20%, 25% [lower] – I think it will be a lot of tests.
The patient had a heart attack. Now the patient must recover. ‘
Wilson also says that the stock market priced in recession fears during last week’s corrective movement. He now believes that the S&P 500 will act sideways in a wide range and will not resume the upward trend, unless investors get a clear picture of where the economy is going.
‘[April 7th] Was a clear capitulation day. That was the moment of recognition that “Hey, we can go across the edge here on the recession.” And we have priced a lot.
4,900 [to] 4,850 was a level that we were looking for, and we found that level. We had a rally of 1,000 points in two days. So now we are stuck in a range, now the markets are going to do what they always do: they will be volatile until we have clarity about how deep this growth slowdown will be and what a recovery looks like that comes out. “
From the end of Tuesday, the S&P 500 acts at 5,386 points.
https://www.youtube.com/watch?v=WB-ok5DXSLQ
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