The recent downside pressure on the pharmaceuticals and biotechs, questions about the strength of corporate earnings and concerns about an aging (90 months old) bull run for stocks are among the issues fueling the pessimists’ claim that the market is destined to start a downward spiral from here.
Not so fast. Several experienced market watchers argue otherwise based on both fundamental and technical reasons. They’re confident that the bull is alive and well.
“Summary results for the second quarter, recently reported by by S&P DJ Indices, offered reasons for continued investor optimism,” said Sam Stovall, managing director and U.S. equity strategist at S&P Global Market Intelligence. He noted that with more than 95 percent of the results in, this year’s second quarter “should set a new cash and equivalents record for the S&P 500 (minus the financials and utilities sectors).”
Stovall also pointed out that capital spending for the entire S&P 500 is coming in 7.4 percent higher than in 2016’s first-quarter, although 3 percent lower than that of 2015’s second quarter.
What’s more, Stovall expects S&P 500 dividends for this quarter “should set a new record and could be the first quarterly $100 billion S&P dividend payout.” He projects full-year 2016 dividend growth will be in the low- to mid-single digits, down from double-digit gains in each of the prior five years.
From a technical perspective, the S&P 500’s price action isn’t making much upside headway, but the index “remains well positioned to move higher while above the nearby support zone at 2159-2175,” according to the technical analysts of the S&P’s U.S. Investment Policy Committee. But even if the index pulls back even more, to the level of 2134 and 2115, “we would expect to see significant buying interest from those waiting for a decent pullback to enter on the long side,” the analysts said.
They also noted that the VIX, or volatility index, “remains at the lowest levels seen in a year as the SPX hovers in new all-time high territory,” they added that “the bias is bullish, and the VIX doesn’t indicate increased downside risk at this time.” The analysts also argue that “we may very well be entering into the next ‘buy the dip’ phase where short-lived spikes in VIX are markers of good buying opportunities.”
For the complete article please visit
CBS News
ABOUT
Dynamic Wealth Research was founded on the principle the world is changing at an ever-increasing pace. The greatest profit opportunities an investor will ever find are from massive, sweeping changes. Dynamic Wealth Research analyzes and closely follows these changes, keeps its readers on the leading edge of them, and shows you how to be best positioned these anxious, interesting, and ultimately profitable times.
