The major equity markets are overbought and are likely to pullback, but thereafter will ‘mount a concerted effort to reach new highs’, says Ron Meisels, President of independent research house Phases & Cycles.
Meisels points out that the recent rally in the S&P 500 from the 11 February low has been broad-based. In only four weeks the percentage of NYSE shares trading above their respective 50-day moving averages has jumped from 11% to over 85%. After such a strong advance, he thinks a pullback would be normal and is even likely given the S&P is about to reach important resistance levels.
However, Meisels thinks that today’s market is a mirror image of 2011 when many participants mistakenly interpreted a healthy correction as a new bear market. As such, he thinks that although markets are likely to correct they will soon attempt to reach new highs.
Meisels is particularly bullish on certain Canadian equities, which he thinks will be worth buying on any pullback.
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