S&P 500 nears 12-month low: time to call a bottom yet?

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on May 5, 2022
  • Jonathan Krinsky warns the U.S. equities might not have bottomed yet.
  • Barclays' Maneesh Deshpande says cash is the safest place right now.
  • The benchmark S&P 500 index is now trading just above its 12-month low.

The S&P 500 index gave back about 4.0% on Thursday, now trading just above its 12-month low. Still, a BTIG expert warns the pain might just not be over yet.

A sub-4000 level remains on the table

According to Jonathan Krinsky, there are several reasons to believe the U.S. equities will slide further down in the coming weeks. This afternoon on CNBC’s “Halftime Report”, he said:

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I think you need to see a 20-day moving average of the downside volume tick up a little bit higher, we haven’t seen that yet. Then, if you look at the twenty years, a lot of the indicators that suggest a durable bottom really haven’t been checked yet.

Therefore, the BTIG chief market technician warns the prospect of the benchmark index slipping under 4,000 level remains on the table. Earlier this week, Strategas’ Chris Verrone also said SPX could sink to 3,500 level.  

Is cash really the king right now?

On a separate CNBC interview, Barclays’ Head of U.S. Equity Strategy, Maneesh Deshpande, also reiterated that it was hard to make a case for owning equities in the current macroeconomic environment. He noted:

Strong corporate balance sheet is a double-edged sword. Companies have a lot of cash and are not getting affected by higher rates. That means the Fed actually has to push harder to change behaviour.

On top of that, the bearish headlines from China further bolsters the idea that investors are better off in cash at present, he concluded. SPX is now down 14% for the year.

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