TPLC - Can The Bull Market Keep On Kicking? Or Is It Growing Tired? The Answer May Surprise You

2024-06-24 14:05:00 ET

Summary

• While the market has gone up well above expectations in H1 and may be due for a normal pullback or healthy correction, earnings have been stellar, earnings growth well above expectations, and the markets are fully expecting an easing from the Fed, which should help to sustain market multiples and justify where the market sits today.
• Wall Street analysts are concerned that only the biggest mega-cap NASDAQ stocks are fueling this rally, saying that the market is faltering, and that negative breadth does not support the current market valuations.
• The AI buildout accounted for $90 billion of last year’s corporate spending. This AI trend will change the world as we know it and fuel a financial mania along the way. And many of the associated industries, like hardware, software, mobile applications and internet security will soar along with the AI buildout.

By Donn Goodman

Does the stock market ( SPY , QQQ and IWM ) have more momentum and upward energy to keep making more new highs? Or are the markets running out of steam and need a pullback before going higher? We will explore these questions and a few others in this week’s Market Outlook.

Welcome back, glad to have you with us for our update and Big View bullets.

A difference of opinions

Last week, a friend of mine who I used to do business with at my old firm called me to discuss the market. He is certain that we are about to go through a correction that may turn into a meltdown. His view, and several others that I follow, is that the markets are setting up for a very big correction, much more than the normal 10% that we go through almost yearly.

He gave me all the reasons that he believes (and gets from other writers, especially the numerous doom and gloom newsletters that exist only because they are so negative). He rattled off issues that may exist with the stock market (especially the NASDAQ 100, QQQ), that included “the market is too expensive, selling at elevated price-to-earnings ratios, price-to-book, etc. Or that the market is being supported by just a few stocks that are driving all the returns” (We addressed this in last week’s Market Outlook, if you have not read it yet, you can access it here )....

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