• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

The Bearish Arguments Grow Louder but Bulls Refuse to Relent

Good stock picking continues as market participants shrug off a host of negatives.
By JAMES "REV SHARK" DEPORRE
Aug 17, 2020 | 06:48 AM EDT
Stocks quotes in this article: QQQ, CVAC, GOLD

Predictions of a market top are growing louder but the indices are still showing few signs of concern. There has been some rotational action recently that has caused some shifts in the internal action but it has not persisted. The Nasdaq 100 ETF (QQQ)  , which is the home to the key FATMAAN names, suffered a three-day selloff but then quickly rebounded and retest recent highs.

While there is some concern about rotation out of expensive 'growth' names and into cheaper 'value' names it looks more like a rational move by fundamentally-driven investors rather than impulsive, emotionally driven reactions by traders. There is still very healthy speculative action taking place. A good example this morning is vaccine maker CureVac NV (CVAC) , which IPO'ed on Friday at $16. It closed the week at $55.90 and is trading at $92 this morning. That is an unusual situation but it illustrates how aggressively traders are chasing certain 'hot' stocks.

A good illustration of the bear's view right now can be found in Barron's this weekend. In an article entitled, "It's Time To Build Cash to Take Advantage of Stocks' Coming Tumble", the author sets forth the key negative arguments. First, that the indices have made a very large move since the March lows. Second, sentiment is frothy, and third, there is a disconnect between fundamentals and valuations. The market has shown little concern about the impact of the Covid-19 crisis on the economy and at some point that may not continue.

The biggest problem with the bearish arguments is that they are so obvious. Anyone that follows the market is very aware of the reasons what this market should go do. The negative factors are no mystery. The big issue is trying to determine when they might matter. Back in February, the market totally ignored the Covid-19 crisis for weeks but then one day it suddenly mattered and the indices went into free fall. Many bears are looking for a replay of that action but instead, they have been squeezed and tormented by a market that refused to embrace the obvious negatives.

There are headlines this morning of a resurgence in Covid-19 cases which is causing pressure on travel stocks. The dollar is weaker and that, combined with Warren Buffett's entry into gold miner Barrick Gold (GOLD) , is helping the precious metals sector.

My primary focus is still on stock picking. When stock picking stops working then that will be the time to become more defensive. I see too many individual stocks on my screens acting well to justify a rush for the safety of cash.

This market will eventually correct and it will probably happen rather abruptly, but as famed investor Peter Lynch once wrote, "Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves."

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, James "Rev Shark" had no position in the securities mentioned.

TAGS: Economy | Gold | Investing | Markets | Stocks | Trading | Warren Buffett | Coronavirus

More from Investing

When it Comes Time to Sell, Will You Act or Will You Freeze?

James "Rev Shark" DePorre
Jan 16, 2021 10:00 AM EST

Why don't more people embrace the ease and power of selling stocks? Why do they freeze and do nothing as losses build?

Cybersecurity Stocks that Lagged in 2020 Could Get Boost from SolarWinds Hack

Eric Jhonsa
Jan 16, 2021 8:00 AM EST

The hack stands to drive an uptick in corporate and government spending to protect both on-premise and cloud assets.

Hungry Traders and Stock Opportunities Aren't Likely to Go Away Soon

James "Rev Shark" DePorre
Jan 15, 2021 4:40 PM EST

It doesn't take much time for stocks with strong momentum to reset and continue on their way.

At What Price Is Ballard Power Systems a Buy?

Bruce Kamich
Jan 15, 2021 3:09 PM EST

Let's check out the latest charts of BLDP.

United Parcel Service Is Testing Key Support

Bruce Kamich
Jan 15, 2021 2:30 PM EST

A look at the charts of UPS.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:01 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    When it's time to sell, will you act or freeze?
  • 08:35 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 1/13/2021

    Lower highs... SPX (Long-Term View) The 1/8/2...
  • 08:07 AM EST GARY BERMAN

    Tuesday Morning Fibocall for 1/12/2021

    Watch if the recent trend of lower highs continues...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login