Tags: Colas | stocks | volatility | S&P 500

ConvergEx's Colas: Stocks in '7th or 8th Inning' of Rally

By    |   Friday, 13 June 2014 09:26 AM

The five-year bull market in stocks is coming close to an end, says Nicholas Colas, chief market strategist for ConvergEx.

Most investors "are missing that we are in the seventh or eighth inning of a big move," he told CNBC. "I think you have to begin to be a lot more tactical. If you have big gains, take them off the table. If you want to have one final puff of the cigar, be my guest. But be careful."

Both the S&P 500 and Dow Jones Industrial Average hit record highs as recently as Monday. And investors have become complacent, Colas noted.

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"We haven't had a 10 percent pullback for over 30 months. That's gotten deeply ingrained into buyer psychology. It's going to be tough to shake them out of that," he argued.

"You do have to keep in mind that we're coming up on quarter-end and there will be that window-dressing trade as well as the Russell rebalance the final week of June, so I wouldn't say it's the right time to get super bearish here. But volatility is clearly cheap."

The fact that the S&P 500 slipped only 0.7 percent Thursday, a day when oil prices reached eight-month highs, "really speaks to how much complacency is still baked into the system," Colas stated.

Komal Sri-Kumar, president of consulting firm Sri-Kumar Global Strategies, goes a step further than Colas. He says the market has entered bubble territory.

"My concern now is we're in the sixth year of monetary easing and still don't have economic growth pickup to a sustainable pace," Sri-Kumar told Yahoo. "We've done [easing] for a long period of time, and there's still no improvement for the growth picture."

GDP shrank 1 percent in the first quarter, though many economists predict it will expand 3 percent or more for the remainder of 2014.

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InvestingAnalysis
The five-year bull market in stocks is coming close to an end, says Nicholas Colas, chief market strategist for ConvergEx.
Colas, stocks, volatility, S&P 500
332
2014-26-13
Friday, 13 June 2014 09:26 AM
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