Welcome to Thoughts on the Market. I'm Mike Wilson, Chief Investment Officer and Chief

U.S. Equity Strategies for Morgan Stanley. Along with my colleagues bringing a variety of

perspectives, I'll be talking about the latest trends in the financial marketplace.

It's Monday, October 19th at 11.30 a.m. in New York, so let's get after it.

With two weeks to go until the U.S. elections, the various outcomes remain uncertain, and this is weighing on

investor psychology because there are so many things tied to the political

outcome that will have meaningful impact on the real economy and various sectors

as such financial markets have been trading in a wide range since August.

For example, the U.S. equity markets have not been able to make new highs in six weeks,

the longest period since this new bull market began in March.

From a technical perspective, I've been closely watching a period since its new bull market began in March.

From a technical perspective, I've been closely watching a key resistance area for the S&P 500 since early September,

and that comes in around 3550.

Last week, the index failed to break through that level for the second time in two months.

This technical failure is not the end of the bull market, but it does suggest to me that the correction

that began in September probably isn't complete.

In short, that means equity markets could

experience another 10% correction back toward more formidable support levels.

More specifically, the 200-day moving average which comes in around 3125.

Bottom line from a technical perspective, I would be more inclined to add equity risk as we approach

that level and more interested in fading equity markets at current prices.

From a valuation perspective, we see the same risk reward levels.

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