Market Will Eventually Climb Over Three Hurdles Next Five Months

 

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