While markets are hanging near the all time highs that were recently made, there is some stagnation that is giving experts pause as to whether there is enough fuel in the tank to continue the uptrend.
Doubt has been creeping into the markets, as much ambiguity exists about the details of the deal. China has been especially hesitant to commit to an amount of agriculture products it’s willing to buy, while large numbers are floating from Washington. The Chinese have also been quiet about tariffs on U.S. goods as well as an enforcement mechanism.
“There remains more questions than answers,” Chris Krueger, Washington strategist at Cowen, said in a note. It’s “more trade truce than deal … It is unclear if any China tariffs on U.S. goods have been reduced … Vague promises on IP protections.”
Some experts look to the technicals as a guide for the stability and virility of stocks.
“Markets are still up small, but what’s important to me is the advance decline line at the open is 2 to 1, generally more stocks advancing then declining. The cumulative A/D line, at historic highs now, is still very healthy for the market,” said Bob Pisani on CNBC.
Other analysts are cautious of how stocks will continue to perform, given the lofty numbers and possible technical resistance markets may be encountering after this significant run-up since October.
“I would be slightly cautious here. We’re bumping up against some resistance that we saw in the earlier rallies, and that is the S&P 3200 and the Dow Jones 28345 or so, so those are going to be areas we’re going to have to punch through to get this moving. We’re a little overbought,” said Art Cashin, of UBS, on the same CNBC segment.
Still, a broad swath of analysts is sanguine about market conditions. Bank of America came out yesterday with its fund managers survey, and 68% of the global fund managers anticipate there there will be no recession in 2020. That’s 30 points above where it was a few months ago. Meanwhile 60% of managers believe that profits will be higher next year, or that there will be an improvement in the economy.
If the stocks are poised for more gains, traders can take advantage with leveraged S&P 500 ETFs, such as the Direxion Daily S&P 500 Bull 2X ETF (NYSEArca: SPUU), Direxion Daily S&P500 Bull 3X ETF (NYSEArca: SPXL).
For more market trends, visit ETF Trends.