«We interrupt the market meltdown for a note of optimism.»

Traders,

Here’s a note from J.P. Morgan making the bullish case for equities here. Like most bulls, their argument hinges on the U.S. economy avoiding a recession. Let’s hope they’re right.

“While the probability of recession has increased meaningfully, we do not see it as a base case over the next 12 months. In fact, we see global growth accelerating from 1.3% in the first half of this year to 3.1% in the second half. Similarly, we see inflation declining from a 9.4% annualized rate in the first half to 4.2% in the second half, which would allow central banks to pivot and avoid producing an economic downturn.

If there is no recession – which is our view – then risky asset prices are too cheap. For instance, small-cap stocks in the US currently trade near the lowest valuations ever. Many equity market segments are down 60-80%. Positioning and sentiment of investors are at multi-decade lows. So it is not that we think that the world and economies are in great shape, but just that an average investor expects an economic disaster, and if that does not materialize risky asset classes could recover most of their losses from the first half. Our bullish and out of consensus view is hence a forecast of a lost year, i.e. a recovery of H1 losses in risky assets.”

Video Of The Day: Jedi Options – What is the Risk Graph

In today’s Jedi Options, Coach Tyler teaches what is the Risk Graph and how to use it to take your options trading to the next level.

Chart of the Day: Bear Market in Context

Here’s how this bear market ranks in the hierarchy of other downturns. If we’re not in a recession and one isn’t imminent, then this certainly seems overdone.

Today’s line up

Traders Lounge 11 AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

The Coaches Show Replay

If you missed last night’s episode with Coach Tyler Craig where he talked about the S.T.E.P. Swing Trading System or would like to watch it again, check it out here.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.

Trade Masters 7:00 PM EST

Every Wednesday at 7 PM EST join us on the Trade Masters where two Coaches go head-to-head to see who can find the best trading setup.

Trading Justice 482: Stock Draft

In this episode, Coaches Matt & Mark Justice welcome Coach Frank Martin from Tackle Trading to draft 10 rounds of stocks in the SPX (S&P 500). Check out the draft for the thoughts of the coaches as they discuss building a portfolio.

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