Canaccord Genuity on U.S. Portfolio Strategy; Further Bottoming Vs. No Jump To Downside

June 26, 2012 9:25 AM EDT
Canaccord Genuity on U.S. Portfolio Strategy by Tony Dwyer

Dwyer said, "We believe the 6% rally off the historically extreme oversold condition on 6/1/12 is likely to lead to a rest/correction over coming days/weeks."

Dwyer's points on why a correction toward an intermediate-term bottom will happen include: 1) Near-term overbought after recent run since 6/1; 2) Heart of pre-announcement season is now; 3) Issues in Spain and Italy; 4) EU Summit news unpredictable; 5) Obamacare decision soon; and 6) Economic Data still weak.

Conversely, Dwyer indicates reasons the market won't jump to the downside, which include: 1) Weekly stochastic working its way back up; 2) two-year swaps are LOWER today and retesting 2012 lows; 3) Big bank CDS stable; 4) VIX at recent low despite over 200 point drop in DJIA last week; and Commodities are mixed vs. being correlated with big downside

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