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A Running of the Bulls: Market Strategy

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Summer is peaking. The lousiest start for stocks in a New Year on record has reversed. The S&P500 finally broke out of a tight mid-2016 range. The S&P500 passed (in mid-July) its all-time high seen in June 2015.

This index technical is very important to bulls.

The 12-month forward look on earnings growth matters in mid-Summer. Consensus sees +0.8% in annual S&P500 EPS growth for 2016 and a hockey stick +13.4% for 2017. In 2015, the S&P500 saw -1.1%.  In 2014, it saw +4.8%.

The latest June ISM surveys say it all. The U.S. economy has stayed on track.

(1) U.S. manufacturers grew in June at the fastest pace in 15 months, signaling a clear if modest uptrend after a bout of extended weakness.

(2) On top of that, economic activity in the non-manufacturing sector grew in June for the 77th consecutive month.

(3) If it is my guess, the U.K. Brexit event will be a non-event for U.S. consumers. 

(4) However, for firms and banks, Brexit will delay any inward investment into the U.K. by U.S. and non-U.S. groups alike.

Yes, the U.S. remains in expansion. Recent monthly labor market evidence emerged conclusive. The U.S. created +287K jobs in June, bouncing back, after adding just +11K new jobs in May. June was the biggest job addition this year.


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