{"id":1598,"date":"2019-12-05T11:47:20","date_gmt":"2019-12-05T11:47:20","guid":{"rendered":"https:\/\/jobbinghood.com\/finance\/2019\/12\/05\/this-stock-bear-is-waiting-on-one-clear-signal-to-jump-back-into-markets\/"},"modified":"2019-12-05T11:47:20","modified_gmt":"2019-12-05T11:47:20","slug":"this-stock-bear-is-waiting-on-one-clear-signal-to-jump-back-into-markets","status":"publish","type":"post","link":"https:\/\/jobbinghood.com\/magazine\/2019\/12\/05\/this-stock-bear-is-waiting-on-one-clear-signal-to-jump-back-into-markets\/","title":{"rendered":"This stock bear is waiting on one clear signal to jump back into markets"},"content":{"rendered":"

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Stock market bears have had few breaks this year. <\/p>\n

The S&P 500
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\n SPX, +0.63%<\/span><\/a><\/span>
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\n \u00a0has nabbed 26 record closes this year, while the Dow
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\n DJIA, +0.53%<\/span><\/a><\/span>
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\n \u00a0counts 15, and pullbacks have often been quickly met by investors ready to buy. The pendulum swinging back toward more optimistic U.S.-China trade talk means a few more records could be reached in 2019.<\/p>\n

Our call of the day<\/strong> comes from JonesTrading\u2019s chief market strategist Michael O\u2019Rourke, an unrepentant bear who sees little reason to dive in now, even if he has missed gains this year. <\/p>\n

\u201cWe have been in an environment of deteriorating stock fundamentals, a weak global economy and a decelerating U.S. economy, against a backdrop of a historically expensive market,\u201d he tells MarketWatch. Despite strong gains, the S&P 500 is just under 10% above its 2018 high, while the Russell 2000
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\n RUT, +0.70%<\/span><\/a><\/span>
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\n \u00a0is below its 2018 high.\u201d <\/p>\n

As for his call: \u201cI will turn positive on the equity market when valuations are more attractive and aligned with economic and earnings growth.\u201d <\/p>\n

What has happened in the past couple of years is that company earnings growth has been \u201cartificial,\u201d driven by the administration\u2019s tax cuts, he argues. That should mean that investors should assign a lower valuation, but they aren\u2019t doing that, which is \u201cdangerous.\u201d <\/p>\n

\u201cI will become more constructive on the equity market as it begins to approach that historic 15x to 16x earnings multiple within a stable economic environment,\u201d says O\u2019Rourke. And right now, the forward price\/earnings ratio \u2014 a popular method of valuing a stock\u2019s worth \u2014 for the S&P 500 is right around 20. <\/p>\n

Does he regret missing out on the stock\u2019s gains? \u201cI have a long-term process that is intended to be bullish when there is tremendous long-term opportunity and bearish when there is notable long-term risk,\u201d O\u2019Rourke said. He believes the Federal Reserve\u2019s lengthy accommodative monetary policy has skewed business and investment cycles. <\/p>\n

The market<\/h6>\n

Dow
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\n YM00, +0.44%<\/span><\/a><\/span>,
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\n ES00, +0.42%<\/span><\/a><\/span>
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\n \u00a0\u00a0and Nasdaq
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\n NQ00, +0.51%<\/span><\/a><\/span>
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\n \u00a0futures are climbing, and European stocks
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\n are up<\/a>, while Asian equities
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\n ADOW, +0.43%<\/span><\/a><\/span>
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\n rose as well<\/a>. Oil
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\n \u00a0is up as the Organization of the Petroleum Exporting Countries meets<\/a>. <\/p>\n

The chart<\/h6>\n

Look for the S&P 500 to rally to 3,200 and up in the first half of next year, say JP Morgan strategists Jason Hunter and Alix Tepper Floman, who provide our chart of the day<\/strong>. <\/p>\n

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\n JP Morgan<\/cite>
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They don\u2019t think bears have a grip on this stock market, despite the pullbacks triggered by geopolitical headlines this year. Investors will likely get tempted into the market around the support level of 3,020 to 3,055, says the team.<\/p>\n

The buzz<\/h6>\n

In the latest on trade, China says Washington must roll back tariffs<\/a> if the two sides want to reach a deal. <\/p>\n

The Federal Trade Commission is widening an Amazon
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\n AMZN, -0.52%<\/span><\/a><\/span>
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\n \u00a0probe to include its cloud services unit, reports Bloomberg.<\/a> Neither side would comment on the article.<\/p>\n

Saudi Aramco may become the world\u2019s biggest IPO, if the energy group prices shares at the top end <\/a>of an expected range.<\/p>\n

Social-media site Twitter
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\n TWTR, +0.10%<\/span><\/a><\/span>
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\n \u00a0is creating buzz with its $600 million junk-bond deal<\/a>. <\/p>\n

The economy<\/h6>\n

A day ahead of U.S. payrolls data, we\u2019ll get jobless claims and the trade deficit, followed by factory orders.<\/p>\n

Random reads<\/h6>\n

A U.S. sailor kills two people<\/a> and himself at Pearl Harbor shipyard.<\/p>\n

Dying teen has one wish<\/a> \u2014 to shake hands with basketball superstar James LeBron.<\/p>\n

Air New Zealand is experimenting with edible coffee cups.<\/a><\/p>\n

Strikes, protests over government\u2019s retirement reforms paralyze France.<\/a><\/p>\n

This art auction is literally bananas.<\/a><\/p>\n

Need to Know starts early and is updated until the opening bell, but <\/strong> sign up here<\/a> to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.<\/strong> <\/p>\n

Follow MarketWatch on <\/strong> Twitter<\/a>, Instagram<\/a>, Facebook.<\/a><\/p>\n<\/p><\/div>\n