The S&P500 is trying to regain all time highs, despite the fact that the Tech sector is not helping in this stretch. As you can see below, it’s at the top of the channel that started 20 years ago. The market is fighting not only the change in sector leadership, but the Yen carry trade, that keeps unwinding, with the yen at 140 (coming from 162), high average valuations (PE 24.7) particularly when compared to an equally weighted index (18.3), European stocks (50% cheaper), and EM stocks. On the flip side, it is supported by earnings, still solid, although deteriorating in quality and concentration; buybacks, which still have some dry powder to deploy before year end, and rates, where the Fed is expected to stimulate the economy and the markets next week. Finally, history tells us the market release tension after Election Day. Will the Bulls break the balance?
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