Price Action Telling You to Get More Optimistic?
Hard to ignore the gains in the stock market on Wednesday.
The S&P 500 touched its highest level since early May and the Dow surged higher by triple digits before paring gains.
Considering the market heard from Fed Chairman Ben Bernanke earlier in the week, the gains can’t be in anticipation of QE3 – that’s got to be priced in by now.
What’s going on?
Top hedge fund manager Anthony Scaramucci thinks the advance in the market is a sign of growing optimism.
After talking with his peers he’s hearing that earnings have generated a lot of bullish sentiment. “The economy is only growing at 1.3% but the earnings numbers are coming through relatively well. Considering the environment– this is magnificent.”
Scaramucci, managing parting of SkyBridge Capital, says that path of least resistance is probably higher. “If we get some positives and some growth – I think we’re looking at a coiled spring.”
Trader Brian Kelly, founder of Shelter Harbor Capital, is on the other side. He concedes that earnings are better than expected but he argues that doesn’t make them good. “Companies are hitting expectations by cutting costs not from growth.”
As a result Kelly believes the current gains are a short-covering rally, nothing more. “I certainly don’t think investors are getting more optimistic.”
What do you think? We want to know!
Posted by CNBC's Lee Brodie
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Trader disclosure: On July 18, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian is long AAPL; Pete Najarian is long C; Pete Najarian is long JPM CALLS; Pete Najarian is long INTC; Pete Najarian is long SBUX; Pete Najarian is long FB; Pete Najarian is long V CALLS; Mike Murphy is long FB; Mike Murphy is long EBAY; Mike Murphy is long TOL; Mike Murphy is long LEN; Mike Murphy is long SWK PUTS; Mike Murphy is long EMC; Mike Murphy is long URI; Brian Kelly is funds long QQQ; Brian Kelly is funds long SPY; Brian Kelly is funds long TLY; Brian Kelly is funds long XHB; Brian Kelly is funds long XLU
For Anothony Scaramucci (as of 7/10)
Anthony Scaramucci is long AAPL
Anthony Scaramucci is long C
Anthony Scaramucci is long GS
Anthony Scaramucci is long JPM
Anthony Scaramucci is long SBUX
Anthony Scaramucci is long AMZN
For Toni Sacconaghi
Toni Sacconaghi maintains a long position in STX
Accounts over which Bernstein and/or their affiliates exercise investment discretion own more than 1% of the outstanding common stock of the following companies: EMC
For Michael King
Rodman & Renshaw makes a market in VVUS
Rodman & Renshaw makes a market in AMLN
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