Welcome to Thoughts on the Market.

I'm Mike Wilson, Chief Investment Officer and Chief U.S. Equity

Strategist for Morgan Stanley.

Along with my colleagues bringing you a variety of perspectives,

I'll be talking about the latest trends in the financial

marketplace. It's Monday, May 4th at 1030 a.m. Eastern, so let's get after it.

After a 35% rally from the lows, equity markets appear to be taking their first real break.

From a technical perspective, we continue to think the 200 week moving average on the S&P 500 will provide strong support for a market that bottomed in March.

That level is currently 2650.

Meanwhile, the 50-week moving average, which is closer to 3,000, provides resistance

until we see how the reopening of America Fares.

In the end, I believe this correction will be a pause that refreshes

in a necessary condition for higher prices later this year.

Our constructive view since late March has not changed, nor has the narrative.

A severe recession acknowledged by all, the bottoming rate of change in economic data and earnings

revisions, unprecedented central bank support,

and fiscal stimulus is likely to become more structural in nature

that leads to rising inflation expectations.

In addition to our more constructive outlook

for the broader market, we've also tilted our recommendations towards higher beta cyclical and smaller capitalization stocks.

While this is a change in our strategy from the past few years to be more defensive, it's not an abandonment of high quality

and or gross stocks.

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