Pro: technicals are now siding with the market bulls


There’s reason to believe that the equities market will continue to build on its recent gains in the coming weeks and months, says Dan Greenhaus – Chief Strategist at Solus Alternative Asset Management.

Greenhaus’ bull case for the U.S. stocks

S&P 500 is keeping well above its 200-day Moving Average, which, as per Greenhaus, historically signals downside exhaustion. On CNBC’s “Closing Bell: Overtime”, he said:

We’re about 5.0% above the 200-day Moving Average. Historically, it’s unusual to see the S&P 500 get this far above the 200-day Moving Average this deep into a bear market and have it not be the end.

He’s cautiously optimistic now that China is reopening and the European Union has pulled out of the fears of recession as well. Year-to-date, the benchmark index is up nearly 7.0% at writing.

Corporate commentary has also been positive

Greenhaus is constructive on the stock market also because industrials did not signal weakness at least in North America this earnings season.

It’s hard to find negative commentary about North America, the U.S. specifically, in the earnings report from Honeywell, Caterpillar, United Rentals. Put together, you can justify why market’s done what it’s done.

U.S. homebuilders have also reported a recent surge in activity as mortgage rates came down from just over 7.0% to around 6.0%, he added.

Greenhaus is not overly bullish, though, since inflation is still well above the 2.0% target, the U.S. labour market is keeping resilient, and the Federal Reserve is signalling no rate cuts in 2023 (read more).

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