Fresh Signs of Stock Market Bullishness

Polls, options, and the fear gauge all point in a sunny direction, for now.

And now the case for stock market optimism: As the US stock market approaches a new high, expectations are that the party will keep going.

 Financial advisors are confident that the economic outlook will remain positive for the next six and 12 months, according to a poll by the Financial Planning Association’s Research & Practice Institute. For the coming six months, 57% of financial advisors are bullish that things will remain good. For the next 12 months, it gets a bit less buoyant, as 45% concur.

 And the next two years, just 29% are optimistic. But that’s a ways away, right? Most forecasters are anticipating a recession in 2020.

 The near-term bullishness comes as the US logged a buoyant second quarter rise of 4.1% in gross domestic product. And earnings for the second period are coming in nicely, with FactSet expecting a 24% growth rate for the S&P 500, which would be the second-highest since 2010’s third quarter (34.1%).

Meanwhile, options investors have been betting that the S&P 500 will surge higher. Credit Suisse indicates that traders have been moving strongly into bullish call options, The Wall Street Journal reported. These give the right to buy shares later on at a price that investors hope will be below the market level at the time.

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And the fear gauge, the CBOE Volatility Index, is near its lowest point since mid-January (right before the winter correction began that month).

So if the trade war or the monstrous corporate debt load or something else doesn’t intervene, life should be good for a while, eh?

 

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