US Stock Markets Gearing Up For A Relief Rally? Experts Reportedly Think So

• Commodity Trading Advisors (CTAs), the algorithm-driven funds that buy and sell based on price trends, have sold about $85 billion worth of U.S. equities over the last 30 trading sessions, it noted. 
• The market commentator also said that the selloff marks the largest 30-day selling wave since the 2020 pandemic.
• Meanwhile, strategists at Morgan Stanley said earlier on Monday that the S&P 500 correction is nearing its final stage amid the Iran war, according to a report from Bloomberg.

The U.S. stock markets are likely gearing up for a relief rally, according to market experts.

The Kobeissi Letter, which provides market commentary, said in a post on X on Monday that systematic selling of U.S. equities may be running out of steam.

Meanwhile, strategists at Morgan Stanley said earlier on Monday that the S&P 500 correction is nearing its final stage amid the Iran war, according to a report from Bloomberg.

The U.S. and Israel’s war against Iran, which has entered its 31st day, has sent U.S. stock markets into a volatile spin amid concerns over inflation and other economic implications. The S&P 500 has lost about 508 points in the past month to slip 7.39%, while the Dow Jones Industrial Average has declined more than 3,500 points or 7.16% in the past month.

The Massive Selloff

Commodity Trading Advisors (CTAs), the algorithm-driven funds that buy and sell based on price trends, have sold about $85 billion worth of U.S. equities over the last 30 trading sessions, The Kobeissi Letter noted.

The market commentator also said that the selloff marks the largest 30-day selling wave since the 2020 pandemic, when CTAs offloaded $105 billion, compared to about $80 billion during the March–April 2025 correction.

“As a result, CTAs are now short -$37 billion in US equities, the 3rd-highest amount since 2019, behind the April 2025 low and November 2023,” it said, adding, “The market is setting up for a relief rally.”

Meanwhile, the team at Morgan Stanley, led by Michael Wilson said that there was growing evidence to indicate that the slide in equities were nearing their ending stages based on previous “growth scares” that did not result in a recession or rate hike, as per the Bloomberg report.

The firm reportedly noted that more than half the stocks on the Russell 3000, an index that tracks the 3,000 largest publicly traded companies in the U.S., were down by over 20% from their 52-week highs. The firm also added that the S&P 500 forward price to earnings ratio had also declined more than 15%, indicating that the market had already priced in the risks of the Middle East war.

Other Near-Term Risks

The Morgan Stanley team, however, reportedly said that while the Middle East war risks, including higher energy costs, were already priced into U.S. equities, interest-rate hikes are a near-term risk for stocks.

The sensitivity of equities to rates is close to the highest level of the past several years, as per the firm, which cited the 10-year Treasury yield closing in on 4.5%, a level that had pressured stock valuations in the past.

“Whether the move in yields today is being driven by inflation considerations, a more hawkish Fed or by deficit considerations from the war or both, we think it’s an important risk variable to consider,” the strategists said, as per the report.

Meanwhile, U.S. equities were mixed in Monday’s trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.20%; the Invesco QQQ Trust ETF (QQQ) fell 0.14%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) gained 0.57%.

Retail sentiment on Stocktwits regarding the S&P 500 ETF was in the ‘extremely bearish’ territory.

Also Read: El-Erian Warns Iran War Could Lead To Financial Instability If Shocks To US Economy Continue: Report

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