Markets jump but “strongest gains behind us”

Markets rose sharply on Tuesday.

The S&P 500 soared 2.2 percent, the STOXX Europe 600 surged 1.6 percent and the Nikkei 225 jumped 1.2 percent.

Jim Smigiel, chief investment officer of absolute return strategies at SEI, said that “the strongest gains in equity markets are behind us” and that “chances of a surprise on the upside are lower than on the downside”.

Howard Gold wrote in MarketWatch that the recent sell-off is just another pullback or correction but warned that if it turns into a 10 percent decline, “this nearly decade-old bull market is really in trouble”.

Meanwhile, Urban Carmel, the writer behind the Fat Pitch blog and ex-president of UBS Securities in Asia, thinks that a “topping pattern” is under way for the S&P 500 and that the recent selloff has not entirely run its course.

However, Carmel also said that a bear market is “the least likely outcome”.