J.P.Morgan Look For A Recovery In U.S. Equities Over The Coming Weeks

Friday saw J.P.Morgan note that "the significant reduction in previously extreme long positions in Nasdaq by momentum traders should allow the equity market to recover over the coming weeks, as happened after the June 11th correction. But a repeat of the strong gains seen during July and August is less likely over the next two months. This is not only because the significant reduction in the short base that we saw on US individual stocks in July and August is less likely to be repeated given the much lower starting point currently. But also because of the event risks we see into September/October (i.e. September FOMC meeting, US election), although we recognize that the steepness of the term structure of implied volatility suggests that these risks are well flagged."