Tom Essaye Chats with Yahoo Finance to Discuss Where Markets are Headed

Yardeni Research’s Ed Yardeni says there is a 20% chance of a market melt-up and a 20% chance of a market meltdown.

Yahoo Finance Senior Reporter Brooke DiPalma and Sevens Report Research founder Tom Essaye sit down with Yahoo Finance Executive Editor Brian Sozzi to discuss where markets are headed.

“I don’t know what the official definition of a melt-up is, but 13 straight days is pretty substantial. I think that that sort of what is important to this melt-up though is why it is happening. I think the first stage of this, honestly, most of these 13 days has been funds that got underinvested or maybe a little too light into all this volatility, trying to chase stocks higher.

And we call these the Mag 7 stocks, the Mega Cap tech stocks, long only rentals. Which means if I’m a fund and I need to slap on exposure really fast, then I need a liquid stock that trades with a high beta to the market and I look right to Mega Cap tech. And so I think a lot of the gains of the past 13 days have not necessarily been fundamentally driven in these tech stocks, but just a lot of funds and investors trying to slap on exposure.

Now, we’re getting into earnings for these tech stocks. And if they’re good, then you’re going to see this thing just turbocharge. And so I think it is a lot about earnings and I think the sort of the pieces are in place for a continued melt up in the tech stocks.” Said Tom Essaye