I was on CNBC last Friday after the close with Kyle Harrington from Harrington Capital Management, Rich Peterson from S&P Capital IQ, and Rick Santelli. Maria Bartiromo and Scott Wapner were the anchors.
I was on in late August and noted the strength in small caps and tech, amid a very pessimistic backdrop, made the odds of a surprise September bounce high. Now with one of the best starts to September in years, I still think this rally could have legs.
Here’s a summary of our discussion. You can watch the video at the bottom.
* Rich kicked it off talking about the fundamentals. Strength in the M&A market, the huge Verizon (VZ) bond issue, and the Twitter IPO are all positives. Valuations seems reasonable and it should lead to higher ground.
* Kyle noted how important next week is. Between the Fed and Syria, there are some big market movers are still out there. Also volatility is here to stay the remainder of the year.
* I was up next. Maria asked me my take on the Fed and if they officially begin tapering, would this be bearish for stocks? The fact we’ve been talking about it for so long, it is probably already factored in. Remember the whole Fiscal Cliff thing?
The action in small caps and the Nasdaq are very positive, as both continue to lead. Price is the only thing that pays and it continues to look good.
Turning to sentiment, there is some optimism coming in, but it isn’t extreme. For instance, Investors Intelligence % looking for a correction spiked over 40% last week. That has been rather bullish going out a month, as it shows everyone is expecting weakness.
Lastly, anymore on 5% corrections we are seeing spikes in fear consistent with what we once saw on 10-15% corrections. I was on in late August and said be open to a September rally, that has played out, and I still think this rally has legs.
* Kyle then noted how important the Bernanke Q&A will be this Wednesday at 2:30 PM ET.
* Rick touched on how important the Fed decision will be to the mortgage industry. Also he isn’t sure how well stocks will do if the Fed does indeed start to taper.
* Kyle and Rich ended things talking about where they are looking to invest here and their thoughts on M&A and yields.