Displaying items by tag: S&P 500

Wednesday, 07 November 2018 12:37

Why the Midterm Result Will Be Great for Stocks

(Washington)

The midterms are finally over, and with it the possible end to the volatility of the last month. Many on Wall Street now say stocks are ready to gain as buying fever takes over. The election went almost exactly as expected, which has set up a possible goldilocks scenario for markets. With Congress split, it is likely that policy gridlock will take over, a situation many think is ideal for stocks. The idea is that the less government does, the more room the market has to operate uninhibited.


FINSUM: The key here is that a split Congress means there likely won’t be any huge policy changes over the next two years. That seems favorable for stocks given the political uncertainty over the last 24 months.

Published in Eq: Total Market
Wednesday, 07 November 2018 12:35

Get Ready for a Rush Back Into Stocks

(Washington)

The midterm elections are finally in the rearview mirror, and generally speaking, the results are exactly what the market expected. That means it may be time for a rush back into stocks after the turmoil of the last month. One analyst put it this way, saying “Following this week’s volatility and the FANGs selloff this week, we’re likely to see traders getting back in and buying the dip. The elections have been a win for both the Republicans and the Democrats, and this will bring balance to the market”.


FINSUM: We do suspect investors will breath a sigh of relief. Firstly, things went according to plan, but secondly, a split Congress is in some ways the best case scenario for stocks.

Published in Eq: Total Market
Wednesday, 31 October 2018 09:50

“Buy the Dip” Has Come to an End

(New York)

For many years the prevailing mantra in the equity market had always been “buy the dip”. Every time the market fell, investors bought the dip and encouraged others to do so. However, that approach seems to have disappeared in the carnage of the last couple of weeks. Whereas falls used to be followed by rallies that pushed the market higher, the last few weeks has been characterized by more sustained losses with shallower rallies. Nordea Asset Management’s chief strategist sums up the mood change well, saying “We’ve seen a shift from buying on dips to selling into strength … We’re increasingly moving from glass half full to glass half empty; that’s the narrative here”.


FINSUM: We think that view sums it up well. While we do believe stocks won’t enter a bear market right now because earnings and the economy are solid, we sense that something in investors’ psyches has fundamentally changed.

Published in Eq: Total Market
Monday, 29 October 2018 13:11

Get Ready for a Big Rally

(New York)

So where is the market headed next? That is the question on every investor’s mind. Guggenheim Partners’ CIO has just made a bold call. His answer—much higher. He argues that stocks are strong and increasingly cheap, which will spark a rally. “Stocks are cheap based on forward multiples and should rally by 15%-20% from here unless policy uncertainty around China and tariffs remains in place”. He continued, saying “I think we’re going through a classic seasonal adjustment”, but that it is paving the way for a move higher.


FINSUM: We think that once the panic passes, which it may have this weekend, investors will realize that stocks are less expensive than before Trump was elected and the economy is going strongly.

Published in Eq: Total Market
Friday, 26 October 2018 12:17

This is the Best Time to Buy Stocks Since 2016

(New York)

Yesterday’s relief rally has already turned sour. Earnings out of Amazon and Google greatly disappointed the market and shot the Nasdaq down as far as 3% in premarket trading. However, despite all the trouble, Wells Fargo says it is the best time to buy stocks since before Trump’s presidency. According to the head of the Wells Fargo Investment Institute, “We believe that this isn’t the end of the cycle or the bull market, and we favor deploying cash now—or even allocating incrementally over the coming days and weeks”, continuing “Current conditions have the potential to create some of the best entry points into equity markets since the November 2016 elections”. That said, Wells Fargo acknowledges that we are at the end of the “easy period” of low volatility and an accommodative Fed.


FINSUM: It is anybody’s guess as to whether this view is right, but we reluctantly tend to agree that stocks are probably going to recover from this bout of volatility sooner rather than later.

Published in Eq: Total Market
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