Is The Market Too Hot Right Now?

This week we’ve seen markets hit all time highs on numerous occasions, which raises the question, “Is the market too hot right now?

The term “melt-up” has also been thrown around in small circles and suggests that some think that the current market conditions are similar to what was seen back in January with the big momentum surge to start the year. So what should we really be taking away from all of this for the average investor?

Pay Attention To The Facts

A big proponent to the recent market expansion has a lot to do with the recent earnings season. Continual revenue beats from some of the more “luxury focused” companies like Tiffany’s (TIF) and today’s beat from Signet Jewelers (SIG) is a sign that the economy is feeling “good” right now. Furthermore, the lack of added interest rate hikes have continued to help the market.

 

You also have new luxury brands aiming to go public as well. Aston Martin, the British automaker best known for being James Bond’s car brand of choice, said on Wednesday that it planned to go public.

“Aston Martin Lagonda has been transformed into a luxury business focused on creating the world’s most beautiful high-performance cars,” Andy Palmer, Aston Martin’s chief executive, said in a statement.

Aston Martin will join the ranks of other luxury brands like Ferrari (RACE) and the makers of Maserati and Alfa Romeo, Fiat Chrysler (FCAU).

Looking Ahead

Many investors are looking at industries that are more progressive right now. Tech and, believe it or not cannabis are delivering solid gains right now. Canadian LP Tilray (TLRY) reported its first ever earnings as a public company this week and blew away most expectations.

Constellation Brands (STZ) upped its stake in Canopy Growth (CGC), another Canadian producer and it’ been said that alcohol juggernaut Diageo (DEO) will throw its hat in the ring with at least one Canadian cannabis company. Cronos Group (CRON), Zynerba (ZYNE) and Insys (INSY) are in the spotlight as the cannabis stock rally could be set to continue into September.

For tech, Apple Inc. (AAPL) continues to stretch its lead in the “trillion dollar market cap club” while Amazon (AMZN) may be close behind after surpassing the $2,000 per share mark in pre market trading on Thursday. Morgan Stanley (MS) raised its target price citing a $1.2 Trillion value for the company and sparked even more interest from investors. Other big tech companies like Microsoft (MSFT) and Cisco Systems (CSCO) were among the other big movers with gains north of 1% each.

Commenting on the markets’ August strength, JJ Kinahan, chief strategist at TD Ameritrade, told FOX Business that,“The market continues to do well with strong earnings boosting us to new highs, what’s surprising is that we’re doing so without the FANG stocks leading.  It’s impressive that we continue to see buying strength under any circumstance and hit new highs.”

And on the earnings side things will continue to be retail-heavy, with notable companies reporting Thursday expected to include Kroger (KR), Dollar General (DG), Dollar Tree (DLTR), and Ulta Beauty (ULTA) from the S&P 500. Other retailers reporting results are scheduled to include Abercrombie & Fitch (ANF), Sears (SHLD), and Perry Ellis (PERY).

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