Now that we’re eight years into a bull market, some investors assume something has to go wrong. I continually field questions from clients wondering if we are headed from the infamous “bubble.” My answer to them is “no.” The bulls remain firmly in control as the S&P 500 refuses to succumb to headlines that, in other times, might have caused bouts of prolonged weekends or selloffs. Despite a small sell off in May over concerns of President Trump’s involvement in the current FBI investigation, investor optimism continues to remain high. Markets are also supported by an improving global economic backdrop, better than expected earnings and the possibility of political reform.
As Mike Gibbs, Managing director of Equity Portfolio and Technical Strategy for Raymond James comments. “We interpret the market’s steadfastness in the face of adverse political headlines as a sign of strength. At the same time, we believe the market is also unlikely to sprint too far above its recent high. Elevated valuation, the various political issues of the day and the possibility of some softer economic data will likely keep rallies in check for the near term. For these reasons, we expect the market to continue to trace out a basing pattern between the low 2300s and low 2400s throughout the summer, as future earnings catch up with the market’s strong price action to this point.”
If you recall last May, I once again attempted to put things into perspective.
Read Brian Wesbury’s – Chief Economist for Frist Trust, comments regarding bubbles in his piece “Long Housing, Short Autos.”
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