Secondly, investors have tons of cash on the sidelines and are waiting until things “feel good” again. He continues.. “Bull markets don’t die of old age. The grizzly will arrive when the Fed tightens meaningfully. Also, there is a saying that “the elevator doesn’t go down until it’s fully loaded”. What it means is that the market won’t go down until investors are fully-invested as market tops are marked by euphoria. That is certainly not the mood of the day as fear reigns.”
Another positive sign currently is the S&P 500 earnings revisions which remain is solid territory according to J.P. Morgan. “Current consensus EPS estimates are calling for year over year earnings growth of 24% with particular strength in technology, financials, energy and telecom sectors. This quarter marks the first time that companies will report under the new tax regime, which will provide a one-time boost to earnings across all sectors; since the start of the year, 2018 earnings estimates have been revised up 7.2% as the full impact of the Tax Cuts and Jobs Act has been digested”
Sources: JP Morgan, Factset, Standard and Poor’s
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