It’s Hard Not To Call This A New Bull Market

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In his Daily Market Notes report to investors, Louis Navellier wrote: 

A New Bull Market

The market ends the first half on a high. All signals are green.

The Bears are in retreat. All the major indexes are going out on the high for the year except the Russell 2000 which had to digest the regional bank pullback, but it’s still up over 8% for the first half, more than double the Dow.

It’s increasingly hard to not call this a new Bull market, and as that becomes more accepted a significant amount of the money on the sidelines in money market funds should start bleeding over to further support stocks. The market opened to a 10-to-1 advance in the S&P, as the laggards are coming to life even as the leaders maintain their strength.

Sector leaders have been the same all year; Tech +41% YTD, Communication Services, +35%, and Consumer Discretionary +31%. Cyclicals and defensive names have been the big laggards; Metal and mining +1% YTD, Energy -7%, Healthcare -3%, and Consumer Staples -1%. Interest rates have not derailed the equity strength.

Sticky Home Prices

Home mortgages are back above 7% yet home prices are staying sticky and homebuilder stocks have been flying as new construction is now 30% of sales instead of the historical 10% as most existing homeowners have little interest in giving up their very low interest rate loans.

Economic numbers today showed that inflation continues to slowly moderate and rising consumer sentiment. All these bullish trends are taking place with a disappointing China recovery and no change in the Ukrainian war, both of which promise a new tailwind if they improve.

No Questioning Valuations

The primary argument against stocks is that valuations are too high, indeed the megatech P/Es are in bubble territory, but that’s been the observation for several months now. This year has been a textbook example of the futility of trying to time the market.

With interest rates still in the lower single digits, investors are clearly willing to park money in stocks without sharply questioning valuations and chase themes as long as it keeps working. 

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