Its Over, page-15750

...market participants have lost sense of risk-reward ....their senses now numbed because markets have always returned so they do not envisage the need to be ahead (and acting ahead) before what is to come.  

....when people get so many chances to stay out of harm's way and failed to take appropriate actions, regrets would not make up for lost opportunity.
Take profits before bear market returns, warns Morgan Stanley
Alex GluyasMarkets reporter
Dec 6, 2022 – 3.06pm


Morgan Stanley has called time on the sharemarket’s ascent, recommending that investors book profits now before a wave of earnings downgrades hits Wall Street.

After correctly predicting the so-called bear market rally, which has swept across Wall Street over the past six weeks, chief investment officer Michael Wilson said the broker had turned into a seller again.
Morgan Stanley expects the S&P 500 to resume its downward trend imminently after the benchmark breached its 200-day moving average last week, which Mr Wilson labelled as “the perfect bull trap”.

“We recommend taking profits before the bear returns in earnest,” he said.

The call marks a shift from Mr Wilson’s view as recently as last week, when he projected the rebound in stocks could continue into December before weaker corporate profits pressure share prices early next year.


Mr Wilson attributed the latest leg of the sharemarket rally to comments from US Federal Reserve chairman Jerome Powell last week, when he declined to push back on the prospect of loosening monetary policy.

The subsequent surge in bonds and stocks was caused by investors being positioned for hawkish rhetoric, and hopes that the Fed would pivot soon to avoid an earnings recession.
Healthcare, consumer staples

Mr Wilson also pointed to Friday’s stronger-than-expected US jobs data.

“The residual strength in the labour market did not scare away the newly minted bond bulls, which is in line with our view rates can fall further into next year as growth slows and the Fed pauses its rate-hiking campaign,” he said.

Morgan Stanley sees “absolute upside” for the S&P 500 rally at 4150 points, nearly 4 per cent above current levels, which could be achieved over the next week.

Conversely, a break below last week’s low of 3938 points, which coincides with the index’s 150-day moving average, would provide some confirmation that the bear market is ready to resume, Mr Wilson said.

The broker recommended that investors stay defensively positioned through exposure to healthcare, utilities and consumer staples stocks as growth and inflation continue to slow.

Growth stocks are unlikely to benefit from falling rates because of earnings risks, especially for technology and consumer-oriented businesses.