E TalkMarkets Tuesday Talk: Ever Higher And Retail Redux

Good Morning. If you haven't done your market check, it was a mixed day on Monday, with the Dow and the S&P remaining more or less flat, closing at 27,845 and 3,382 respectively, but the Nasdaq was up a full 1 percent, closing at 11,130. Currently the New York markets are flat, but the day has just begun.

Source: NYT

Today's TalkMarkets contributor roundup looks at what new market heights we might expect and how this jives with the state of the overall economy's recovery amidst the long shadow of Covid-19.

Christopher Lewis, this morning in S&P 500 Forecast: Looking Bullish, predicts the S&P is on track to hit an all time high. He writes "it is only a matter of time before we get the breakout that will send this market much higher". 

"I think it is only a matter of time before we break above the 3400 level and when we do it will send this market looking towards the 3500 level above. That is a large, round, psychologically significant figure, and it is an area where we would find a lot of potential profit-takings. For what it is worth, several of the large banks on Wall Street have increased their estimates, and therefore a lot of the typical Wall Street traders will be looking to buy this market."

Lewis contends that, only if the S&P does drop back below the 3000 level, would one need to be concerned with a change in the overall trend. In the meantime he suggests that "buying dips continues to be the best play". See the S&P trend chart below:


The staff at Upfina, writing in What Will The New Economy Look Like? is upbeat about the month of August and charts that the first governmental stimulus has done the job of getting the retail sector back online. 

"Even though there was a 2nd spike in COVID-19 cases in July, retail sales growth was strong. The one major weak point was autos and auto parts. Without that, it was great. Real retail sales are now 0.6% above the pre-recession peak. Retail sales bounced back in 5 months which is a record quick recovery. It took over 6 years for real retail sales to recover from the financial crisis decline and it took almost 4 years to recover after the 1990 recession. The enormous fiscal stimulus did it’s job.

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William K. 1 year ago Member's comment

WE see that "the economy is recovering", at least as far as SOME stocks indicate. What actual reality shows is that there are a few big winners and a whole lot of losers. Restaurants, gas stations, and apparel are the mail losers, with furniture and appliances being losers as well. With gas stations suffering it seems like the oil companies will be suffering a bit as well.

So that hard times ARE NOT OVER just yet, and in reality the damage has not stopped, but just become a slower process.

Certainly that blast of cash pumped in helped in some areas but not in others, but it did not leave the public with the feeling that the emergency is past.

Possibly, if some method of actually stopping the disease is created and made available, "a real recovery" can happen. But that is presuming that the federal banking folks do not make some really dumb moves. That is my wishful presumption, not my sincere belief.

Bill Johnson 1 year ago Member's comment

Good read. And thanks for linking to @[PennyWiser](user:84653)'s article. I enjoyed what he had to say.