Adam Gault
The S&P 500 (SP500) upside to over 5,000 has been a breadthless rally since the October lows, and Julian Emanuel, senior managing director of Equity, Derivatives & Quantitative Strategy team and the Portfolio Strategy team at Evercore ISI, said he is not raising his S&P price target 4,750 because the market needs to catch its breath, he said.
The S&P 500 (SP500) has seen four months of gains, with 15 out of 17 weeks positive. “[These are] the kinds of things that you haven’t seen more than once or twice in an investing life’s time,” he said during a CNBC interview.
He added that it is time to “catch our breaths and realize that there is a lot of good news baked in a year, where frankly, what we’re seeing is a reluctance to short by professionals, the likes of which I’ve only seen after the meme stocks, and then around the tech bubble, which gives us a pause.”
Emanuel said that short interest at an absolutely decade low is one of the signs of the market experiencing FOMO (fear of missing out).
In addition, historically, when congressional control is as tight as it is today, stocks tend to have volatility.
“We’re not calling for an end to the bull market,” he said. “We’re calling for applause. We think there are some other more interesting places to put your money.”
He named China equities (FXI), (MCHI), (KWEB), and Japan equities (EWJ), (DXJ) as examples.
Another metric that investors should look at, he said, is valuations. “Valuations have gotten to a point where if you look at it on a one-year forward basis, the average return is zero.”