Before U.S. markets opened Monday, John Kosar, director of research at Asbury Research, said “more near term weakness” is expected for U.S. stocks. But that they appear to be within weeks of an intermediate-term bottom.
He put together a list of positives and negatives for the markets. The positives: Extremely negative momentum, elevated volatility, a high put-to-call ratio, bearish investor sentiment and oversold conditions. The negatives: Weakness in China, the Nasdaq 100 failing to break through resistance, Microsoft showing signs of rolling over, widening corporate bond spreads and seasonality.
The positives, while they can contribute to taking stocks lower, indicate exhaustion is forming in the markets, said Mr. Kosar. “[They] previously either coincided with or closely led every intermediate term US stock market bottom in recent history,” he added.
Asbury Research Subscribers can view our latest research on US and global stock markets by logging into the Research Center via the gold button at the upper right corner of the page.