Markets rise but “easy money is in the rearview mirror”

Markets were mostly higher on Wednesday.

The S&P 500 rose 0.2 percent and the STOXX Europe 600 rose 0.5 percent but Asian markets were mixed.

Despite two consecutive days of gains, some analysts remain cautious.

Bob Doll, senior equity strategist and portfolio manager at Nuveen, said that “the easy money is in the rearview mirror”.

Mark Newton, independent market analyst at Newton Advisors, wrote: “Reversals of trend look likely technically, and one should consider using strength Wednesday to flatten out and/or adopt hedges for an above-average chance of a drawdown into next week.”

“The average bear rally in history is approximately 11%,” noted Gary Gordon, president of Pacific Park Financial. “We stand at roughly 11.5% off of the correction lows right now.”

“If you missed an opportunity to lighten your allocation to risk assets like stock and high yield bonds when the S&P 500 was peaking near 2930-2940, you might want to tactically lower some risk during the current rally,” suggested Gordon.

In contrast, JP Morgan strategist Marko Kolanovic thinks that the stock market is “drifting higher”. The firm has a 3,000 target for the S&P 500 for the end of the year.