US mkts in strong position, play on long side: Richard Ross

US stocks ended with a rally on Friday that broke a six-day losing streak. Major indexes rose more than 1%, boosted of Chinese growth figures and earnings from JPMorgan Chase & Co.

Global technical analyst of Auerbach Grayson, Richard Ross is bullish on the US markets and sees prices grinding their way higher. "We continue to think that the markets here are in a very strong position despite the fact that the headline might suggest the otherwise that continue to come out of Europe," he said in an interview to CNBC-TV18. However, Ross added that this cannot be called as a strongest bull market, but one can still play to the long side and gain exposure to beaten down US equities. Below is the edited transcript of Ross’ interview with CNBC-TV18. Q: What do you make of how this week has turned out and the fact that we are closing on a relatively positive note? A: Yes, I would say that is even more than a relatively positive note. It’s a very strong note. It’s the strongest gains - we have had a six day pullback here in the S&P 500. But we remain in a very nice uptrend defined by a pattern of higher-high and higher-lows since we bottomed out in June on that pause, one day breakdown below the 200 day moving average. We continue to think that the markets here are in a very strong position despite the fact that the headline might suggest the otherwise that continue to come out of Europe. We think these prices are grinding their way higher. This isn’t the strongest bull market, but you still want to play to the long side. You want to gain exposure to beaten down US equities here, so we like what we see. Q: What’s driving prices higher because it can’t be just China and it can’t be the mixed signal that the minutes of the Fed meeting sent out saying “yes, we would consider extraordinary measures if so required,” but it didn’t seem to indicate that it would be required immediately now? So what’s driving stocks higher today? A: It is this notion that we are starting to discount a lot of these negative headlines, negative macro shorts that we have seen. This ongoing crisis out of Europe is going on its third or fourth year. We have been dealing now with JP Morgan in this situation. We got a little bit more clarity there today with the earnings. So, we have removed one dark cloud at least in terms of the uncertainty there. Q: Even earnings season in the US isn’t looking that good, is it? Expectations from earnings season this time are fairly muted, so irrespective of how JP Morgan is doing I am surprised that’s not the reason why stocks would be lower? A: You made a great point that the expectations themselves have been so muted by the slowdown in China, the slowdown in Europe and I think that it’s friendly to call a slowdown in Europe. But we have managed those expectations down to such a level that it really sets us up for an upside surprise in equities. I get more nervous in this business when the expectations are hiked and then we undercut those estimates. So yes, the expectations have come down, they have been managed, but if they can just manage to be slightly better you know how the markets operate. They are going to jump on that exceeding those expectations rather than the number itself.