What Can End The Rally And Send Stocks Tumbling: JPMorgan Scenario Analysis

Earlier today we reported that according to JPMorgan's Market Intel desk, stocks may see some modest further downside into next week, but then it's "gametime" as the S&P hits the afterburners and rises to 7000 by November.

But what if this outlook proves too cheerful? To assess the risks of a downside case, JPM's Positioning Intelligence team has laid out several scenarios that discuss how the market may reach a "suboptimal" outcome. As PI's Jonathan Schlegel writes, "concerns about weak seasonality, the length and magnitude of the equity rally, increased bullishness of some investors, and the amount of easing priced into Fed forecasts could set the market up for some near-term downside, but looking through to year-end, there does seem to be a case that a further equity rally is more likely than not."