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Canaccord Genuity technical strategist Javed Mirza recommends adding North American equity exposure in the short term and intermediate term.
In the short term, defined as a 1-2 week period, Mirza argues that equity markets are deeply oversold, and a sharp counter-trend bounce is likely to develop this week. “The S&P 500, a good barometer for equity markets, is approaching near-term oversold levels that have supported previous short-term (2-4 week) rally phases in March, May, and June,” Mirza said.
In the intermediate-term, or 2-4 months period, the firm’s technical work strongly suggests adding equity exposure as a double bottom attempt is underway, in conjunction with equity markets reaching Sentiment and Oversold extremes consistent with prior intermediate-term (3-6 month) price lows. “If equity markets can hold above their 200-week moving averages in the coming weeks, it would imply that equity markets have forged a double bottom and that the secular bull market remains intact.”
