JP Morgan's Market Intelligence team cut its tactical view on US equities to
cautious/neutral, saying indices are likelier to trade sideways over the next
2–3 weeks while subindexes and individual stocks may see larger volatility. Key
drivers: after Jackson Hole, bond-market-implied probability of a September Fed
hike rose roughly from 35% to 58%; the JPMPURE momentum index is down >21% from
its June peak and the Classic momentum index is down ~34%, well beyond typical
10–15% pullbacks. Positioning offers no clear directional signal — US TPM sits
at the 37th percentile — and historical patterns point to about 3–4 weeks of
range-bound trading. Monitor inflation and rate-expectation moves, credit
spreads, and the speed of momentum liquidation. Index-level damage is not the
base case, but crowded, momentum-dependent stocks could see outsized
idiosyncratic volatility.
