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What Icahn's missing about stocks: Trader

What Icahn's missing about stocks: Trader

Carl Icahn spooked investors when he called the markets "overheated" on CNBC this week. But despite the warning, one trader insists the market is reasonably valued.

"Carl Icahn's call that the market is due for a pullback is absurd," CNBC Contributor David Seaburg said Thursday on CNBC's "Trading Nation."

According to Seaburg, this perception that the market is overheated is coming from three main developments.

The first has to do with the underperformance in the transports. "Everyone is up in arms about the transports, but the underperformance has very little to do with a weak economy and has more to do with the structural issues within the sector." The average is down nearly 10 percent year-to-date while the broader S&P 500 index is up 2 percent in the same period. "I wouldn't look at this [divergence] as a negative indicator right now."

Second, Seaburg noted that some traders may worry that the heavy buybacks have distorted valuations. Share repurchases are running at their highest levels since 2007. Seaburg thinks some investors may worry that topline growth won't be able to offset the benefits that the buybacks have had in the past. "I think it will be but it may take a little time," said Seaburg, head of equity sales trading at Cowen and Co. "We could be in a bit of a pause mode right now."

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Last is the biotech, as sky-high returns this year have many on Wall Street worried that biotech could be in bubble territory. "I think biotech could pullback a little bit, but I do think there is going to be demand for this space because this is still the best growth sector in the entire market."

Seaburg sees the S&P 500 staying within the range anywhere between 2,000 and 2,130. "Ultimately I don't think there's anything to be worried about from a valuation perspective," he added. "I don't see this market derailing."

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