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  Wednesday, 8 Feb 2017 | 1:58 PM ET

Stocks are staying afloat for now — but 'rhetoric' could ruin the rally: Patterson

Posted ByAnnie Pei

With the major indexes only points from record highs, one market expert warns that the unpredictable political climate could soon wreak havoc on stocks.

"I think [what's keeping stocks afloat is] earnings and a dose of optimism about what policies we're going to get from this administration," Rebecca Patterson, chief investment officer at Bessemer Trust, said Tuesday on CNBC's "Futures Now.""We're definitely discounting valuations, some deregulations, some fiscal stimulus, and our base case is that we are going to get those things."

According to Patterson, as long as President Donald Trump and Congress continue to press for tax reform and economic stimulus, a level of hope will remain in the market. "But anything we see that derails [those policies], a focus on the Supreme Court or Obamacare, that takes us away from stimulus for an extended period [could make the market] a little vulnerable to at least a tactical pullback," she added.

Patterson is particularly interested in Trump's meeting on Friday with Japanese Prime Minister Shinzo Abe, especially since the president scrapped the Trans-Pacific Partnership trade agreement. Patterson believes the markets could be in jeopardy, depending on how willing Trump is to build a trade partnership with countries like Japan.

"If you come out of that day and the rhetoric is more aggressive, non-consensus building, I think people will get more worried about this protectionist rhetoric," she said.

But ultimately, Patterson is most concerned with Trump's dealings with China, stating that a "trade war with China is going to end badly." China is one of the U.S.'s largest trading partners, and the market expert believes that butting heads with the Asian trading giant would lead her to reconsider her stance that the markets could rally higher.

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  Sunday, 5 Feb 2017 | 5:03 PM ET

The Trump Rally speed bump is your opportunity to buy, according to market bull Tom Lee

Posted ByBrian Price

One of Wall Street's biggest bulls is waving the white flag on the rally and delivered an unnerving message for investors: A near-term storm is on the horizon for stocks.

Lee, who serves as head of research for Fundstrat Global Advisors, recently announced his firm's 2017 S&P 500 year-end price target of 2,275, which is approximately 1 percent below current levels. The market watcher expressed concern over value stocks getting off to a weak start this year.

"I think it's possible that we're going to have a bumpy first half," Tom Lee explained on CNBC's "Futures Now" Thursday. "It won't be a straight shot upward for stocks. The first half, we're going to have a draw-down by 5 percent."

His analysis echoed that of veteran technician Louise Yamada, who told CNBC last week that the Dow Jones Industrial Average is stuck in a "sideways consolidation" that could signal "a pullback of about 5 or 6 percent."

However, Lee encouraged investors to buy the dips, in anticipation of an upswing in the second half of 2017. He is also adamant that a pullback won't lead to a bear market.

This is in large part because Lee believes the Federal Reserve is no longer the key backstop for markets. Furthermore, Lee is encouraged by the potential for additional gains stemming from the anticipation of pro-growth policies under President Donald Trump.

If executed properly, tax reform, lighter regulation and fiscal expansion should trigger faster economic growth, which Lee says favors value in the markets. Additionally, he says that fiscal expansion occurring in multiple developed economies will help bolster growth in the U.S.

"We essential have a policy 'put' in place," noted Lee. "It's setting the stage for earnings to be the primary driver [of markets]. That's how you're going to pick stocks and sectors."


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  Saturday, 4 Feb 2017 | 5:00 PM ET

A veteran technician suggests why these three charts could signal a 5% pullback

Posted ByAnnie Pei

The S&P and Dow are within mere points of new record highs and the Nasdaq saw a new record close on Friday, but veteran technician Louise Yamada warns that the charts are flashing signs of caution.

On CNBC's "Futures Now" Thursday the managing director of Louise Yamada Advisors said there are three charts that show how the post-election rally has gone "a little too far, too fast."

According to Yamada, the Dow Jones Industrial Average is in a "sideways consolidation" that could signal "a pullback of about 5 or 6 percent." Her chart of the Dow shows that the index has traded in a range of about 19,800 and just below 20,000 from mid-December to early January.

Based on Yamada's predictions, this means the Dow could fall as low as 18,844, before picking back up and taking the next leg higher.


The Dow transports also tell a similar story. "We'd like to see it a little more definitive breakout," said Yamada. She noted that the index got another "little breakout" from its December high to the high late last month, but it has since backed off by about 2 percent.

"Right now it's still in consolidation along with everything else. We'll see what happens, the buy signal is still in place, but you like to see follow through," Yamada said.


On the other hand, the Nasdaq composite has continued to grind higher, but Yamada says that this lack of a trading range actually points to an upcoming stall in the index. "You have this continued upward progression, which eventually does start to consolidate," she explained. The index "could pull back to the 2016 uptrend, which would only be about 5 percent down."

In other words, the Nasdaq could fall back to 5,371.


But Yamada also believes that the pullbacks could lead to another breakout for stocks. The consolidations are "normal," explained Yamada, and therefore she remains constructive on the market and sees another rally potentially in store.

The major averages haven't closed with a one percent move since December 7.


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  Wednesday, 1 Feb 2017 | 9:22 AM ET

Why February could see strong market gains, despite heated political backdrop

Many traders have been quick to say the so-called Trump trade could be over, but market rallies don't usually end when everyone is saying they will, according to Bespoke Investment Group co-founder Paul Hickey.

The analyst believes February's strong historical performance during bull markets will continue despite the heated political climate that has raised doubts about the sustainability of this uptrend.

"The end of January has historically been weak over the last several years," Hickey said Tuesday on CNBC's "Futures Now," noting an overwhelming number of business news stories suggesting the Trump rally was over. "When you do see those kinds of headlines, most market peaks and rollovers are usually not so unanimous in the headlines."

The S&P 500 ended January on a four session losing streak. Yet the major indexes in January still finished higher. Hickey argues that February could add to those gains.

Since 1985, during bull markets, February has averaged a gain of nearly 3 percent, with positive returns 83 percent of the time, according to Hickey.

The analyst's research shows that February typically starts off on a positive note and then keeps rising through the middle of the month. By the end of the month, a sideways pattern usually emerges.

Hickey predicts the consumer discretionary area and materials could be among the best ways to play the seasonal pattern this year.

"Since 2010, it [consumer discretionary] has been up every February and going back to '85 it's been up nearly three-quarters of the time, average gain of over 2 percent," he said

Hickey says materials have come in positive 70 percent of the time in February over the past 30 years. In the years when there's a Republican controlled Congress and White House, it's the only sector that has outperformed 100 percent of the time.

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  Sunday, 29 Jan 2017 | 5:00 PM ET

Wall Street veteran Art Cashin finds the rally ‘discomforting,’ and here’s why

A pause in the historic stock market rally could be just days away, according to UBS Financial Services Director of Floor Operations Art Cashin.

Cashin, a fixture on the floor of the New York Stock Exchange since 1964, believes the market has gotten ahead of itself. His call is based on the Dow's speed to 20,000, low volatility and what generally happens during a president's first year in office.

"That thousand point move from 19,000 to 20,000 was accomplished in 42 days. And, that's very fast. That's the second fastest thousand point move in the history of the Dow," observed Cashin recently on CNBC's "Futures Now."

And, it was done on very low volatility — a trend that isn't sitting well with the Wall Street veteran.

"It is a little discomforting to old timers like me to see you make brand new record highs — multiple record highs — and see the VIX hanging around ten," speaking about the "fear gauge" that serves as a barometer of market fear. "You start to worry 'is that a sign of complacency and where's it going?' said Cashin.

The VIX hit 10.30 on Friday, a two and a half year low. The latest move lower comes as the Dow, S&P 500 and Nasdaq trade around all-time highs.

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  Sunday, 22 Jan 2017 | 5:00 PM ET

Ron Paul says to expect an economic ‘downturn’ under Trump, not a revival

Posted ByAnnie Pei

For all the fanfare that greeted President Donald Trump at his inauguration on Friday, the next four years of his presidency could very well be marred by a weakening economy as a result of "injurious" policies.

That's according to past Texas Congressman and former presidential candidate Ron Paul, who joined CNBC's "Futures Now" last week to echo his past sentiments about the new president.

Most notably, the well-known Trump critic believes that the President's proposed plans could overspend the economy into trouble and drive the Federal Reserve to interfere.

"With his massive increase in infrastructure and the military, I think there's going to be a lot more spending," said Paul. "The debt is going to be much bigger [and] I think that will put more pressure" on the Federal Reserve, he said, with the central bank already planning to tighten interest rates.

"You have good times, and then you have bad times to compensate for the artificially good times," he added. "So we'll have a downturn and that will be a real challenge for the new administration."


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