Should we expect a break above 4,700 or a fake out? The honest answer is to say it’s “unknown and unknowable” because there are no crystal balls or time machines to give us 100% certainty, note Steve Reitmeistertrading expert and publisher of Reitmeister Total Return.
However, we must understand that either is highly plausible. It is also important to note that the main long-term trend is bullish. Let there be NO DOUBT about that with rates still at historic lows and the economy rapidly improving after the devastations of Covid.
So in general we want to be bullish. And anyone who gets too cute by heavily betting that stocks will go down at that time is likely to look pretty silly. However, I suspect that the fairly large one-month move from 4300 to 4700 has slowed this short-term bull.
This makes me suspect that a period of consolidation around 4700 is the most likely outcome. Maybe flirt sometimes about 1% above that mark. Or maybe up to 2-3% below sets a likely consolidation range we could play in until the Santa Claus rally takes over with 4,800 roughly a certainty before the end of the month. ‘year. 5,000 steps out of the question.
The goal is to stay bullish as any pullback would be short-lived and superficial. But indeed, these periods of consolidation are accompanied by significant sector rotation that could easily reduce your favorite stocks by 5-10%. This leads to a buying mentality when the best stocks come up for sale.
In summary, we are in the midst of a long-term bull market that potentially experiences another brief pause (consolidation) before strengthening for the next upside. So continue to have a bullish bias in order to buy the decline in your favorite stocks.
Our final recommendation is Evercore (EVR). Why am I buying? Obviously, you have noticed how hot the IPO market is lately. For example, all the electric vehicle companies rising above the GMs and Fords of the world (which is madness).
Well, this type of market is a ripe choice for investment banking firms. And Evercore is right in the heart of the industry, seeing exploding results… and therefore a soaring share price.
The POWR ratings also sing the praises of EVR as it is the #3 ranked title in an industry with the highest rating. And as we drill down into the details, we see an A for quality (which is the most important component rating) and a B for value.
The value story does not end there. On average, analysts see a 16% rise in shares at a fair value of $177. However, that seems way too low considering a PE of just 11.
In addition, they are on average 23% gains over the last 3 quarters. That means it’s ridiculously cheap now compared to a market with multiples of 20-25 for most companies. PLUS the fact that they continue to crush earnings quarter after quarter resulting in higher and higher fair value.
A price of $200 per share seems a much more reasonable target given the current earnings situation. And $250+ isn’t out of the question next year if they keep rocking and rolling with earnings reports. That’s why I like the idea of picking up stocks at just over $150.