THE WEEKLY TOP 10
Table of Contents:
1) The stock market has already priced-in a “Phase One” deal.
2) Earnings growth (and future estimates) do not justify this level in the stock market.
3) We’re seeing small (repeat, small) cracks in the consumer.
4) So many indexes and ETF’s have become quite overbought on a near-term basis.
5) Having said this, a “melt-up” from here is not out of the question.
6) Healthcare is overbought, but looks very good on a longer-term basis.
6a) UNH detaches from Sen. Warren…and is breaking out.
7) The Russell 2000 & the Transports still have a lot of catching up to do.
8) The semis look great, but one concern is the cracks that are showing up in MU.
9) AAPL is very overbought and quite ripe for a tradeable pull-back.
10) The Presidential Election: It’s NOT “The economy, stupid”…it’s “The stock market, stupid.”
11) Summary of our current stance.
1) We think we can all agree that if the “Phase One” deal negotiations completely break-down, it’s going to be quite negative for the stock market. However, we do agree with the consensus that says a Phase One deal will indeed be agreed to and signed before too, too long. However, we’re not as sure as the consensus seems to be that a smaller deal will be a catalyst for a significant (further) move higher in the stock market.
2) Another reason to question whether the stock market can rally a lot further from current levels is earnings. Earnings growth has badly lagged behind the stock market this year. So it’s hard to convince us that earnings growth in the mid-single digits next year…following zero growth this year…will be enough to justify a stock market at its current level…much less one ...