JP Morgan’s Kolanovic says the slide in US stocks is not over

Via a note from Kolanovic on Monday, saying the fall for US stocks is likely to extend lower, citing rising risks to the macroeconomy, including:

• rising Treasury yields
• strong US dollar
• high oil prices

And:

• complacency around equity valuations
• inflation staying hot
• diminishing expectations for imminent Fed rate cuts
• overly optimistic profit outlook

Sees some temporary stability this week due to earnings results.

“The correction likely has further to go”

• “Market concentration has been very high, and positioning extended, which are typically red flags, at risk of a reversal”
• the current market narrative is very similar to last US summer, when upside inflation surprises and hawkish Fed revisions triggered a drop in risk assets
• investor positioning appears more elevated now
• “The multiple expansion seen in past months, extremely low volatility metrics up to recently, tightest credit spreads since 2007, and the general inability by market participants earlier in the year to identify any potential negative catalysts for stocks are starting to shift”

S&P 500 daily chart:

This article was written by Eamonn Sheridan at www.forexlive.com.