The bullish thesis for stocks is stronger now
The bullish thesis for stocks is stronger now: Tom Essaye Quoted in Market Watch
The market has passed four key tests, newsletter writer says
Tom Essaye, founder and president of the Sevens Report, says the bullish thesis for stocks is stronger now because all of the tests set up two weeks ago were passed.
The major economic reports of the past two weeks were solid, with the payrolls disappointment largely explained by hurricanes and strikes;
The Fed remains committed to cutting rates;
Earnings were more mixed than excellent but still haven’t changed estimates for S&P 500 earnings per share next year very much;
And Republicans have large enough majorities to push through pro-growth legislative changes.
“While the bullish thesis passed the tests of the past two weeks, do not confuse this with a market that cannot go down,” he says. “There are real risks to this rally that we cannot ignore over the medium/longer term, although investors could ignore them unless forced not to between now and year-end.” A move to 6,200 on the S&P 500 before the end of the year is “entirely possible” as he said the market will likely favor value, cyclical sectors and the equal-weight S&P 500 over the market-weighted index.
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