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Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Business https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ A correction of 5% to 10% is crucial for this stock market, warns Jeffery's strategist

A correction of 5% to 10% is crucial for this stock market, warns Jeffery's strategist



Are we approaching a point where we finally want to see how much juice is left in this stock market from a trade agreement?

A report that US and Chinese dealers are hard at work over "more memorandum of understanding" for a big deal gave stock futures a good bump late Wednesday. But these gains faded in Thursday's session, raising the question of whether the market is finally running out of the seemingly endless talks between Beijing and the United States

Another valid question is how do we even know what stocks have "priced in" on it front? Two financial bloggers, Reformed Broker's Josh Brown and Irrelevant Investors Michael Batnick hit that topic in a recent video chat. They concluded that investors would be wise not to assume whether a market has fully absorbed trade agreements, corporate news, and so on.

"I think it's probably a comment on what's happening on the market," says Batnick. "As if you know the odds … you don't know. You'll find out after that."

We also think the Fed doesn't get in the way of more stock gains. As the Real Heiseinberg blog briefly summarizes, it is more or less a "what-else-do-you-want-from-them-scenario".

As gravity-defying as this after Christmas jump looks, the twenties have a plus in their corner: the so-called AD (advancer / decliner) line is on a full-time high ̵

1; more stocks rising than falling – meaning you can Throw away dark thoughts about an equity stop. Currently.

It does not mean that this should not happen, says our call of the day from Steven DeSanctis, strategy strategist at Jefferies, who tells MarketWatch that he does not, does not see "sustainable momentum" in up-and-up action for stocks since the beginning of the year.

"Consolidation, a recall is absolutely necessary," said DeSanctis in a Wednesday phone call. For example, he notes Russell 2000

RUT, + 0.46%

is 16.5% since the beginning of the year, the third best start in data dating back to 1979.

"At any time You see a big spike up, it is generally met with a downtick, a 5% to 10% correction will be welcome and it would be justified, "said the strategist, adding that there are plenty that could pull the correction draw – a slowdown in China, Europe or the United States, lower earnings estimates, valuations withdraw.

The last point is a big reason that he would like to see some foam come out of the market. S & P 500 companies are currently trading close to 19.8 times forward earnings, he says. It compares to 20 times in August and 16 times at the end of 2018. Seeing the level dip to 17 times would make stocks look much more attractive right now, he says.

Still DeSanctis claims that the withdrawal is seen late last year was unjustified "because we do not see the economy here in the US going into recession" and adds that their "happy-lucky" US economist has only penciled into a modest reduction in GDP by 2020 compared to 2019. Good results from Walmart

WMT, -2.27%

this week has only moved on to reassure his concerns about the economy, he said.

It brings us to the stocks he likes right now. "I would say that my favorite sector is consumer discretionary and retailers. The argument here is that the economy will grow from the consumer's side of things," he said, noting that the fact that people have jobs and make more money is arguments against a brewing concession.

"The general trend has been very good for consumers," says DeSanctis, adding that "what companies generally say is the consumer in very good shape."

Also read: ] A $ 3 trillion tsunami is flooding the stock market, warns fund manager

Market

Dow

YMH9, -0.11%

S & P 500

ESH9, -0.14%

and Nasdaq

NQH9, -0.09%

futures are lined up. Wednesday's session saw modest gains for Dow

DJIA, + 0.24%

and S & P 500

SPX, + 0.18%

while Nasdaq

COMP, + 0.03%

succeeded only in his eighth straight winning session.

Dollars

DXY, -0.07%

is up with crude oil

USA: CLU8

but gold

USA: GCU8

is pitching lower.

Asia stocks saw a mixed day with a modest rise for the Shanghai Composite

SHCOMP, -0.34%

while Europe's shares

SXXP, -0.27%

is pretty much

The chart

"If I owned it, I'd sell everything. I'm not even fun. You can't just hurt Zion Williamson on National TV and don't go through a long and long time serious recession, "it was David" El Presidente "Portnoy, founder of Barstool Sports on the big headache that broke out at Nike

NKE, + 0.32%

late Wednesday.

Today, virtually everybody seen pictures and videos of Duke forward Zion Williamson writhing in pain after his Nike

NKE, + 0.32% shoes fell apart midgame, causing an injury to the upper NBA draft knee. Here he hopes that his recovery will not take too long. As far as Nike is concerned, it already looks hard on the market:

Read: The small NFL before 1993 players

Buzz

Newspaper

CAR, -0.57%

zooming forward after beating forecasts. Hormel

HRL, -0.39%

and Domino's

DPZ, -0.27%

will report in front of the open, with Kraft Heinz

KHC, + 1.03%

Hewlett Packard Enterprises

HPE, -0.25%

Roku

ROKU, + 0.79%

and Dropbox

DBX, -1.92%

comes after the clock.

See J & J

JNJ, [0.459016] + 0.49%

saying that it has been rejected by U.S. Pat. Justice Department and SEC on the safety of baby powder and talc products.

Apple

AAPL, + 0.64%

and Goldman

GS, -0.04%

develops a new credit card that will offer extra personal finance features on the iPhone Wallet app, sources say.

China sells drones to American allies as soon as possible.

Plus: Read and subscribe to Barron's articles without leaving MarketWatch

Economy

Recorded day of data, with weekly jobless claims, recurring durable goods, and Philly Fed survey all before the opening . The Markit manufacturing and services PMI, together with existing home sales and leading economic indicators, is to follow.

Read: What is all excitement? Fed staff's economic outlook hardly changed in January

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