One of the market’s biggest skeptics is going back to his old ways.
Morgan Stanley strategist Mike Wilson cautioned that the rally that has enveloped markets in recent weeks is long in the tooth and overdue for a breather.
“As predicted, falling interest rates at the back end have led to modest, further gains for this bear market rally,” Wilson wrote in a new note on Monday. “However, with last week’s price action, the S&P 500 is now right into our original tactical target range of 4000-4150. While the index has modestly exceeded its 200-day moving average and the breadth continues to expand, the downtrend from the beginning of the year remains in place. This makes the risk-reward of playing for more upside quite poor at this point, and we are now sellers again.”
Several weeks ago, Wilson correctly predicted the market’s bounce. And after a brutal year for investors, the rally has been much welcomed.