Market Will Eventually Climb Over Three Hurdles
Next Five Months
Today Goldman Sachs
downgraded US. equity market for two major reasons: 1. high market
valuation--current forward p/e 16 is
higher than long-term average 14.5; 2. low earnings growth cannot support
market to go higher.
Days ago, George
Soros, Carl Icahn, Jeffery Gundlach, and Stanley Druckenmiller all publicly
talked down market, creating a little panic in the markets.
The latest Fed
minutes today further hammers market. The Fed possibly will raise interest rate
second time, which really surprised the market, sending gold price diving.
The market seems to
really face too many hurdles to cross: uncertainties of interest rate, Brexit,
presidential election. Each hurdle looks like a tower wall to climb. But each
will not impede this bull market run, to the writer's view.
Given that the global
economy is still shaky and needs the major central banks' accommodation, the
Fed will not likely be too aggressive in hiking interest rate. If the Fed
indeed raises interest rate in June meeting, it will not do so again in the
next meeting for all sort of reasons.
Historically,
presidential election seldom creates a bear market. Then how about Brexit? It
should be another temporary market fear that will not have deep impact on the
market.
The bearish comments
by the four aforementioned market gurus, to some extent, help soothe market, in
the contrarian way. This can be seen via semi stock NVDA and others keep
hitting new high after solid earnings reports.
Thus, the chance that
the market enters 15%+ correction should be slim during next 5 months, but not
guarantee.
Gunning Ju
Market Analyst
from Flushing,
NYC
