This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
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It is Hard To Be Bearish on the Stock Market These Days!
It was a pretty quiet today, with S&P 500 finishing flat at 2,801. We are still above our breakout level at 2,794, and as long as that holds I’m not overly worried what does or doesn’t happen on a given day. At the StockTwits forum last night I was telling the audience that it is hard not to be bullish on this market. Earnings thus far have been good, geez even IBM beat on both the top and the bottom line. Yeah, IBM beat on revenue, this is a company that saw something like 20 straight quarter of revenue declines.
It may be a small sample size, but of the 86 companies in the S&P 500 to have reported so far, 77 have beaten estimates, and only six have missed, which of course means three have met. You want to be bearish in a market that is trading 17 times 2019 earnings, with companies beating estimates, be my guest.
GDPNow is tracking second-quarter GDP growth as of July 18 at 4.5 percent! That is a tremendous amount of growth. We find out next Friday just what that number is.
Next Week Key
Next week will also be the week for earnings. We get all the big companies, Alphabet, Amazon, Facebook, etc. So next week will be a crucial week for the stock market, and where things go from here.
But remember inflation is low, interest rates are low, and the economy is growing, and that is the recipe for a strong stock market. Perhaps trade tariffs play into this a bit, but I also happen to think that if it hadn’t been for the trade tariff news, the market would likely be much higher than where it is. So for the most part, my feeling is most of that news has been priced in.
Next week will be a big week, and if earnings and guidance out of these companies are robust, the market will be off to the races for the balance of the year.
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.