The S&P 500 and Nasdaq ended the week near record highs despite disappointing employment reports.
Both indexes hit all-time highs on Thursday and were hovering near them on Friday. Markets extend relentless rally that stretches throughout summer despite resurgence of COVID cases in the United States
But, warns Matt Maley, chief market strategist at Miller Tabak.
“There is a huge amount of foam in the market right now, as we’ve seen in other major market highs, which have only become apparent,” Maley told CNBC’s “Trading Nation”. Thursday.
Men are now seeing warning signs in the market that look like red flags during the peaks of 1999-2000 and 2007-2008. For example, during the dot-com bubble, he says, stocks have skyrocketed regardless of fundamentals like AMC and GameStop this year.
“Now we have a similar situation,” Maley said. “You’ve got stocks of memes blowing up,… they’re not going to change the world and those stocks are going to go up 2,000% in a matter of days, you’ve got these PSPCs going crazy here. We have a very, very expensive stock market and an overbought market.
Just take the high-tech Nasdaq 100, he says. The QQQ Nasdaq 100 ETF is now trading at a 70% premium over its 200 week moving average, which was preceded by several previous corrections.
While he doesn’t anticipate a major crisis like the crisis of the 2000s, Maley says it helps investors be cautious and adjust their strategy accordingly.
“It doesn’t mean sell everything, 50% cash or 20% cash, but if you raise some cash you can buy the stock if all goes well, but more importantly you will. “Don’t sell when the market is down 15% or 20%, when everyone’s selling at the wrong time, you’re going to have the lead, hold onto your gains and hold the market. Will be able to profit when it goes up. Male said.
Gina Sanchez, chief market strategist at Lido Advisors and CEO of Chantico Global, says investors should look for catalysts that could signal a recession. She sees two possible triggers.
“The first catalyst I see is that we have built in very high expectations. We are going to experience strong GDP growth this year. Next year we will have lower GDP growth. Is it? Will he still be strong? Yes, but it will be less than now, ”Sanchez said in the same interview.
Like the GDP projections, Sanchez says profit growth could be weak as companies are stronger than in previous quarters. While remaining strong, she says there is room for despair.
Sanchez said: “The other, most important catalyst that I look for is when liquidity starts to rise and come out of the market. When that happens, I think that’s when you can see the real potential. “Can improve.”
The Federal Reserve, one of the biggest sources of additional liquidity in the market, has indicated that it could begin to ease its bond buying program by the end of the year. The next central bank meeting will be held on September 21-22.
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