We don’t think the market has bottomed. We clearly have not priced in a recession – David Spika, CIO GuideStone Capital Management (quoted in “Investors Fear Quick End To Rally” [SUBSCRIPTION REQUIRED], Karen Langley, WSJ B1
Everybody knows it’s a bear market rally. Everybody is just waiting for the market to roll over. Everybody is expecting it to happen sooner rather than later. And for just that reason – combined with the Fed pivot and what’s already been discounted by the declines so far this year – the stock market is going higher for the time being.
While there have clearly been some major blowups this earnings season – namely Snapchat (SNAP) – I’m seeing a lot of beaten down stocks rally hard on earnings. Just today – for example – Uber (UBER) and Pinterest (PINS) are up double digits after brutal beatdowns year to date. Walmart (WMT) – which lowered guidance last Monday afternoon and got pummeled Tuesday – has quickly regained all of its losses.
Sometimes what everybody knows isn’t so. The pain trade for now is higher.