The shareholder retains the constant stream of restless headlines and somber metrics in a fierce connection with the economy that has been hotly debated on Wall Street.
To read:Jim Cramer urges investors not to be fooled by new heights in the stock market
And while it may seem rather toppy and precarious, Thomas Hayes, founder and chairman of Great Hill Capital, could be entering a new phase in the bull market along the way.
“It’s a Dickensonian, ‘Tale of Two Markets’ if you look beneath the surface,” he wrote in a blog post. “While it may be true that the general indices may be for a rest in the coming weeks, such a rest may be accompanied by ‘below the surface’ meetings in laggard / non-love sectors.”
In other words, developments that could weigh on the big indices by taking leaders like Apple AAPL,
, Amazon AMZN,
, Facebook FB,
and the other tech players with big names, would actually provide a breakthrough for defeated names ready for a handball.
‘So,’ what do you think of the market? ‘ is less interesting of a question than, ‘what do you think about banks, commodities, emerging markets, defense stocks, tech, etc?’ ‘Said Hayes.
He used this map to illustrate how much relative appetite there has been for tech lately:
Some names he mentioned could include writing back in a post-pandemic world: Bank of America BAC,
, JPMorgan Chase JPM,
, Apache APA,
Murphy Oil MUR,
, Boeing BA,
, Lockheed Martin LMT,
, MGM MGM,
, Las Vegas Sands LVS,
, Southwest Airlines LUV,
and United Airlines UAL,
, to name just a few with compelling intent.
“Announcing a vaccine, as a major breakthrough that pointed to near-certainty and timeline on vaccine / treatment … would shift consensus FROM slower recovery / growth (lower rates) – which benefits tech – TO faster recovery / growth (slightly higher rates) – what benefits from cycling, “he explained in his post.” If these groups turn, it will be abrupt. “
Banks in particular need to see a big move higher, he added.
“Most people will chase banks after they trade with a 50-100% premium to book against buying now – in many cases – with a discount to book,” Hayes said. ‘How do we know? Because it happens to come from every historical recession. There is no recovery without Banks / Cyclicals leading out of the gate (early / high growth stages). No credit growth, no recovery. ”
Overall, he stays Bullish about what lies ahead, especially with the aforementioned laggards.
“The catalyst probably comes from science. Laws not against science, ‘he said. “I would not be surprised to see a bit of volatility / pruning in the coming weeks. Stop dancing for now while the music plays, but keep your feet on the floor. ”
For now, the stock market is relatively quiet, with the Dow Jones Industrial Average DJIA,
, tech-heavy Nasdaq Composite COMP,
and S&P 500 SPX,
all hovering over the breakeven point in Thursday’s trading session.
.
