“With the market at highs, what will the Fed do? You can’t have an uber dovish Fed with the market at record highs,” Redler said. “This was [Fed Chairman Jerome] Powell’s rally. Will he snuff it out?”
The S&P 500 closed at 2,933, just seven points away from its September intraday high of 2,940. “Things look good. The small caps turned up, and they’ve been a laggard. Every level has been met with skepticism versus excitement. But things have been acting well and trading well. Every time the market pauses, there’s a grudge match between the bulls and the bears. Now we’re at 2,940 which is the next obstacle,” said Redler.
Once the market takes back 2,940, Redler said the next level on the S&P will be the psychological 3,000, the year end target of many market strategists.
“We tend to advance by an average of 10% before falling into another decline of 5% or more,” said Sam Stovall, chief investment strateigst at CFRA. “I think we’d have to start seeing earnings projectison for the full year start to rise in order for that to happen.”
Some analysts had been expecting a ho hum earnings season for the market, since it was expected to be the first quarter of declining profits since 2016. But the earnings have been better-than-expected, and earnings so far look to be down just over 1%, and that could improve further —even to the point of being positive, some say.
“Granted expectations were as low as a limbo stick,” said Ablin. “My original thought was let’s focus on the economy because earnings aren’t going to be anything to write home about. Earnings are doing better than I would have thought. It depends on the margins, but a number of companies are able to raise prices. Whirlpool was a huge beat out of nowhere. Wages are up 3.5%. I think there are some discretionary dollars out there.”
In addition to Whirlpool, several other companies discussed improved pricing, like Procter and Gamble and Kimberly-Clark.
“Compared to last quarter, everyone thought the world was going into a global recession, and when the yield curve inverted there was a lot of arm flapping about that…I think it’s slow and steady. My guess is we’re not going to make a fortune here, but it doesn’t’ sound like the bottom is going to fall out. I’m happy to watch paint dry,” said Ablin.
from Viral News Updates http://bit.ly/2DwfbMa
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