LIVE MARKETS-Stuck in a range until things are clearer

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STUCK IN A RANGE UNTIL THINGS ARE CLEARER

While the S&P 500 .SPX made some headway last week, Morgan Stanley equity strategist Michael Wilson published research on Monday with some caution as to where we go next.

The benchmark's testing of both the lower and upper ends of Wilson's 5,000-5,500 range last week, reinforced for him "the notion that we remain in a volatile trading environment."

Hopes for a China tariff deal and a more dovish Federal Reserve were a boost into the end of the week.

But Wilson cautioned that "while a modest/brief overshoot of 5500 can persist very short-term, a sustained break above the next level of resistance (5600- 5650) is likely dependent on developments that have yet to come to fruition."

Specifically the market would need a tariff deal with China to bring down the effective rate materially along with a more dovish Fed and "back-end rates below 4% without recessionary data." Also on Wilson's wishlist is "a clear rebound in earnings revisions," which were less than rosy in many cases last week.

"Bottom line, until we see clearer risk-on shifts in these factors, range trading is likely to continue," Wilson wrote.

As if on cue, Wall Street indexes after trying to advance on Monday, are quietly weakening as the day wears on.

With the uncertainties in mind the strategist suggested keeping defensive assets in your portfolio.

But he is also recommending that investors "pick spots in high quality cyclicals that have already discounted a material slowdown in both macro conditions and earnings."

(Sinéad Carew)

FOR MONDAY'S EARLIER LIVE MARKETS POSTS:

HOW HAS CORPORATE AMERICA ADAPTED TO MARKET SHOCKS (SO FAR)? CLICK HERE

WALL STREET STARTS THE WEEK WITH SOME LACKLUSTER CHOP CLICK HERE

BULLS BASK IN BREADTH THRUST CLICK HERE

JPM WILL BUY RISK IN H2, UNDER CERTAIN CIRCUMSTANCES CLICK HERE

CITIGROUP UPGRADES EUROPEAN AUTOS ON TARIFF MITIGATION HOPES CLICK HERE

RANGE BOUND TRADING LIKELY TO CONTINUE, SAYS MS CLICK HERE

STOXX GAINS AS M&A SWEETENS UNCERTAIN TRADE BACKDROP CLICK HERE

EUROPE BEFORE THE BELL: FUTURES UP AS DEALS AND EARNINGS SWEETEN THE MOOD CLICK HERE

MARKETS LONG FOR MORE SIGNAL, LESS NOISE ON TRADE CLICK HERE