It would be easy to overthink the reasons behind today's rebound in stocks. But market watchers like Sam Stovall, chief equity strategist at S&P Capital IQ, cite another one: precedent. In a note to clients today, Stovall writes, "history, sentiment, and technicals indicate that a recovery, or at least a counter-trend rally, is around the corner."
That's not to say that he thinks we are out of the woods yet or that the declines that have so far decimated May are over. Stovall says the flight to cash and high quality sovereign debt is still indisputable, while pointing to the 10-year yields of US Treasuries and German bonds at 1.73% and 1.43%, respectively.
"Usually we have to wait until a bear market (-20%) before we get such a washout," he says in the attached video. "So I tend to think we are ready for some sort of bounce." His research shows that May's decline alone puts it in the 96th percentile for monthly S&P 500 losses that date back to World War II.
On Greece in particular,Read More »from History, Sentiment, and Technicals Are All Predicting a Market Bounce: Stovall