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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/ And 5% to 10% correction is vital for this stock market, warns Jefferies strategist

And 5% to 10% correction is vital for this stock market, warns Jefferies strategist



Are we going to see how much juice is left in this stock market from a trade-deal announcement?

A report that U.S. and Chinese negotiators are hard at work over "multiple memorandums of understanding" for one big deal to give stock futures and a nice bump late Wednesday. But those gains faded into the Thursday session, which raises the question as to whether the market is finally out of patience over the seemingly endless talks between Beijing and the United States

Another valid question is how do we know what stocks are "priced in" on that front? Two Financial Bloggers, Reformed Broker's Josh Brown and Irrelevant Investor's Michael Batnick have been greeted over that topic in a recent video chat. They concluded that investors would be wise to make no assumptions when it comes to whether a market has fully absorbed trade deals, corporate new, etc.

"I think that's probably the go-to commentary for what's going on in the market, "Says Batnick. "As if you know the odds … you do not know. You find out after the fact. "

We also think the Fed is not going to get in the way of more stock gains. As the real Heiseinberg blog succinctly sums up, it's more or less a "what-else-do-you-want-from-them scenario."

As bulls have one plus in their corner: the so-called AD (advancer / decliner) line is at an all-time high ̵

1; more stock rising than falling – meaning you can cast aside dark thoughts of an equity plunge. For now.

That does not mean it should not happen, says our call of the day from Steven DeSanctis, equity strategist at Jefferies who tells MarketWatch that he doesn 't see' sustainable momentum 'in up and down action for stocks since the beginning of the year.

"Consolidation, and pullback is absolutely necessary," said DeSanctis in a Wednesday telephone interview. For example, he notes the Russell 2000

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     RUT, + 0.46%

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

"Anytime you see a big spike up, generally met with a downtick. And 5% to 10% correction would be welcome, and it would be justified, "said the strategist, adding that there is plenty that could pull that correction trigger – a slowdown in China, Europe or the US, lower earnings estimates, valuations pulling back

That last point is a big reason he would like to see some froth come off the market. S & P 500 companies are currently trading close to 19.8 times forward earnings, he says. That compares to 20 times last August and 16 times at end-2018. "Still DeSanctis maintains that the pullback seen late last year was unjustifiable" because we do not see the economy here in the United States. going into recession, "adding that their" happy-go-lucky "U.S. economist has only penciled into a modest reduction in GDP for 2020 versus 2019. Upbeat results from Walmart

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     WMT, -2.27%

This week has only gone further to calm his worries about the economy, he said.

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

"The general trend has been very good for the consumer," said DeSanctis, who adds that "what the companies say is overall is the consumer is in very good shape."

Also read: A $ 3-trillion tsunami is about to flood the stock market, warns fund manager

The market

Dow

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     YMH9, -0.12%

S & P 500

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     ESH9, -0.16%

and Nasdaq

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     NQH9, -0.11%

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

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     DJIA, + 0.24%

and S & P 500

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     SPX, + 0.18%

while the Nasdaq

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     COMP, + 0.03%

just managed his eighth-straight winning session

The dollar

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     DXY, -0.06%

is up, along with raw

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     US: CLU8

                            
                                  
      
      
      
      
      
      
      
      
      
                                   , but gold

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     in US: GCU8

                            
                                  
      
      
      
      
      
      
      
      
      
                                   is pitching lower.

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

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     SHCOMP, -0.34%

while Europe Stocks

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     SXXP, -0.25%

are largely

The chart

"If I owned it I would sell it all. I'm not even joking. You can not just injure Zion Williamson on National TV and not go through a long and severe recession, "that was David" El Presidente "Portnoy, founder of Barstool Sports on the major headache that erupted for Nike

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     NKE, + 0.32%

late Wednesday.

By now, pretty much everyone has seen the photos and videos of Duke forward Zion Williamson writhing in pain after his Nike

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     NKE, + 0.32%

shoe fell apart midgame, causing an injury to the top NBA draft pick's knee. Here's hope his recovery does not take too long. As for Nike, it's already looking rough in premarket:

Read: The buzz

The tiny NFL pens for pre-1993 players

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     CAR, -0.57%

is zooming ahead after beating forecasts. Hormel

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     HRL, -0.39%

and Domino's

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     DPZ, -0.27%

will report ahead of the open, with Kraft Heinz

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     KHC, + 1.03%

Hewlett Packard Enterprises

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     HPE, -0.25%

Year

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     ROKU, + 0.79%

and Dropbox

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     DBX, -1.92%

coming after the bell.

Watch J & J

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     JNJ, + 0.49%

which says it's been subpoenaed by the U.S. Justice Department and SEC over the safety of baby powder and talc products

Apple

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     AAPL, + 0.64%

and Goldman

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     GS, -0.04%

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

China is selling drones to U.S. allies as fast as possible

Plus:

The Economy

The Economy

The Markit manufacturing and services PMI's, along with existing home sales and leading economic indicators will follow.

Read: What's all the excitement? Fed staff's economic outlook changed barely in January

Random reads

Chemical warehouses blamed for nine-hour fire that left dozens dead and injured in Bangladesh's capital

Fox News host Tucker Carlson was caught on tape calling his Dutch guest and "moron" and worse

"Empire" actor Jussie Smollett could face prison as police say he Being alive after attempting ultimate selfie

Snow falling … on Las Vegas

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