CNBC had an article yesterday [07 / 12 / 16] titled, "For Stock Markets, 'Flat is the new up,' says Goldman strategist."1
The title is so vibrantly optimisic, isn't it? Now, I'm not here to bash this guy. On the contrary, I wanted to point out what he had to say.
This article stuck out to me for a few reasons. Namely, toward the end the analyst, David Kostin, tells us what his team at Goldman is overwight and underweight in their porfolio. What caught my eye was what they were underweight. It's energy, materials and industrials. This is a smart move given the global slump in demand and consumption. I couldn't argue with that.
It's also a blatant way of saying you don't believe in a long-term-bullish foundation for the markets at this moment. I guess that's fair given his admittance of a projected 2% growth in the coming years...not exactly the larger annual returns of the S&P 500 in the late '90's though, either.
The analyst's remarks point toward caution right now given these market highs amidst such a dismal economic backgorund in our current history. Looking at the Dow [DIA] or the S&P [SPY] could show you just how resistant to change the market is given its inability to break-out above its resistance levels since Jan. 2015. The graphics below help demonstrate this point further.
Jos. G. Sellery