Barry Ritholtz: It’s Not Yet Time to Leave the Bull Market Party

Friday, 19 Apr 2013 01:56 PM

By John Morgan

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The bull market in stocks is still in place, and investors should wait for concrete evidence to the contrary before heading for the exits, according to stock analyst and author Barry Ritholtz.

Ritholtz, CEO of Fusion IQ and author of “Bailout Nation,” said mixed signals on the health of the economy have not yet turned negative.

“This bull run will eventually end … the best way to handle that trade is to wait for the market to tell you the run is over,” Ritholtz told Yahoo Daily Ticker. “When you take a look at all the surveys, we’re somewhere in the middle. We’re not excessively bullish; we’re not excessively bearish.”

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He said his firm has observed that cash balances in individual investment accounts are at an 18-month high, which is positive because it means plenty of money is available for deployment into stocks.

But Ritholtz said he is also observing “high bull/bear ratios,” which suggests that sellers have a stronger hand at the moment, which is a neutral or bearish sign.

Ritholtz said there are still stocks and sectors that he favors, including dividend payers, value stocks, and healthcare and consumer staples stocks.

“Seventy thousand baby boomers retire every day,” he told Yahoo. “They’re huge consumers of biotech, pharmaceuticals, health care and hospital services. There are opportunities, but make sure you’re not overpaying.”

CNBC’s Bob Pisani noted the overall stock market’s technical picture is not as positive as earlier, nor are recent economic reports and certain technology stock results.

“However, it's a little early to draw any conclusions from earnings, other than tech disappointment,” Pisani said. “Early bank reports were good, but Bank of America disappointed, and multi-industry company reports have been mixed. General Electric was fair, but CEO Jeff Immelt noted ongoing weakness in Europe.”

By Friday morning, 104 companies had reported quarterly earnings (21 percent of the S&P 500), with 67 percent beating expectations, slightly above the norm, Pisani said.

Earnings were 2 percent higher than the same period last year, with revenue ahead of last year by 3.2 percent, according to S&P Capital IQ.

However, Pisani said company guidance thus far in earnings season has been cautious to poor.

Another financial prognosticator, MarketWatch columnist and co-founder Kevin Marder, suggested intermediate-term investors should keep a “high cash position” for the time being in the face of recent stock market weakness.

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