By Senad Karaahmetovic
Forget about the 'V-shaped' rally in S&P 500, BTIG's Chief Market Technician told the firm's clients in a note ahead of the new trading week.
Some analysts were calling for a strong reaction to the 200-week moving average, similar to what happened in 2018. However, a short rotation lower on Friday proved that the Monday-Tuesday rally was just another short-term relief rally.
"Our sense is we break lower this week and head towards the 3,400 level later this month. We still see zero panic in terms of the VIX curve, but as we have seen throughout history, this can change quickly," the Chief Market Technician told clients in a note.
The "unrelenting" macro headwinds have continued to push yields and dollar higher. For the Chief Market Technician, this kind of setup will only accelerate the break lower in stocks.
"Ultimately this should set-up a more capitulate move towards the 3,400 level later this month, with the VIX curve inverting more than a couple points," the Chief Market Technician added.
As of 06:15 ET (10:15 GMT), the S&P 500 futures are down about 0.15% in pre-open Monday.