A Bank of America (BofA) strategist believes the US stock market is gearing up for a corrective move as equities flash signs of weakness.
In a new CNBC interview, BofA’s head of technical research, Paul Ciana, says stocks need to stay above a key technical indicator or risk triggering another sell-off event.
“I think markets are focused on likely 50-day moving averages and trailing lows over the last month or two. So about 6,550 was the lows on the last two dips in the S&P 500.
Coming into the full sessions over the next few days, if those levels are holding, it could be a little encouraging for the bull market to re-establish itself here. But if we start to roll over and break through that, then there’s likely some more tactical pain to come.”
At time of writing, the S&P 500 is trading at 6,656.
For precious metals, Ciana says gold and silver are now at a high risk of a correction, even though they are in the midst of a parabolic run.
“Silver, gold, platinum, we’ve talked about a number of times on the show this year, going higher.
So, in that vein of thinking, you’re trailing your stop. You’re trying to stay long for as long as you can, and you’re fighting essentially every statistic that says the likelihood of a correction, at least in the short term, is very high.”
At time of writing, gold is trading at $4,232, while silver is worth $52.
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