WSJ: Stock Market Rally Fails to Make Believers Out of Many
As deceased comedian Rodney Dangerfield might say, the stock market just can’t get no respect.
While the Standard & Poor’s 500 Index has generated a total return of 14.4 percent so far this year, many market participants doubt that can be sustained, The Wall Street Journal reports.
"This is the most disrespected rally I've ever seen," John Buckingham, chief investment officer at Al Frank Asset Management, tells the paper.
Some of the bearish arguments are quite compelling: Europe’s financial crisis drags on, economic growth is slowing worldwide and U.S. corporate earnings growth is abating.
Stocks have gained as Europe’s mess has largely stabilized in recent months. But the last four years have repeatedly seen a pattern where U.S. stocks rally amid such stability and then fall back as the next inevitable leg of Europe’s crisis unfolds.
When it comes to technicals, the 14.4 percent return represents a very strong performance for a whole year, let alone 7.5 months.
And the ascent has been accompanied by thin trading volume. Daily volume has averaged 4.88 billion shares this month, down 40 percent from last August.
Scott Bleier, founder of CreateCapital Advisors, has a colorful term —“the most hated rally” — for stocks’ recent move.
“No one can figure out, with the dramatic amount of bearishness and the individual investor having completely left the market, how the market could be sitting at three-year highs,” Bleier tells Yahoo.
“You have to throw away everything you’ve learned about markets to put your money in,” he says, adding that the fundamentals don’t justify the current level of stock prices, and the market will soon take a major fall.