Former JPMorgan (JPM) strategist Marko Kolanovic believes that Tuesday’s market rally was not driven by meaningful geopolitical news, but rather by technical factors tied to the end of the month. In a post on social media, Kolanovic said that the latest headlines about Iran signaling a willingness to end the war were not new or significant enough to move markets on their own. Instead, he pointed out that month-end positioning, particularly pension fund buying, was likely the real driver.
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Forget margin or options. Here's how the pros trade SPYTherefore, he suggested that the rally may offer short-term relief for bullish investors, while also giving bearish investors a better opportunity to sell into strength. Interestingly, market moves seem to support that view. Stocks, including the S&P 500 (SPY), pushed higher during the day, while oil prices turned negative after the Iran-related headlines.
However, short-term Treasury yields barely moved. That matters because bond markets are often more sensitive to real changes in economic expectations. As a result, the news may not have been as impactful as the stock reaction implied, and the market may not actually be repricing geopolitical risk, but simply reacting to short-term flows.
Is SPY Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SPY stock based on 413 Buys, 82 Holds, and eight Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average SPY price target of $832.36 per share implies 28.1% upside potential.
