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Oct. 30, 2017, 10:21 a.m. EDT

That may have felt like a blow-off top, but don’t get spooked into a portfolio makeover

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By Shawn Langlois, MarketWatch


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Was Friday a blow-off top for tech?

Back in the go-go days of the dot-com boom, the Nasdaq /zigman2/quotes/210598365/realtime COMP +1.44%  outperforming the Dow industrials /zigman2/quotes/210598065/realtime DJIA +0.68%  was more the rule than the exception, as Cisco /zigman2/quotes/209509471/composite CSCO +0.39% , Intel /zigman2/quotes/203649727/composite INTC +0.51%  and a lineup of other tech giants inflated the massive bubble that would soon burst.

Friday’s session was a bit of a throwback. The Nasdaq, led by Amazon /zigman2/quotes/210331248/composite AMZN +2.70%  and a mostly different lineup of market leaders, absolutely trounced the blue chips by more than 2% in the biggest show of domination since 2002, according to the WSJ Market Data Group.

Blow-off tech top, anyone?

The bears would have you believe the exhaustion move has finally arrived and the carnage is finally about to begin. But the analytical braintrust over at Charles Schwab /zigman2/quotes/201281754/composite SCHW +1.59%  doesn’t see it that way.

In our call of the day , Schwab investment strategist Liz Ann Sonders leads a bullish note on the state of things , pointing to solid earnings at home and abroad, as well as improving economic growth as further tailwinds for this market.

“Along with new records being set by stocks, investor sentiment measures are showing widespread optimism; yet households’ exposure to equities is not at an extreme,” Sonders writes. “We believe the bull market will continue, and suggest investors remain at their target allocations, but worry a bit about complacency.”

It’s hard NOT to be a bit complacent lately, considering the market’s reluctance to deliver painful retreats. But to think there’s no chance for it to come crashing down is a dangerous frame of mind, even if you’re of the belief there’s legs to this rally.

“We believe the current bull market will ultimately be followed by a traditional bear market — at a point of either excess tightening by the Fed and/or the anticipation of an economic recession,” Sonders says. “Neither is in our sights; although there are enough risks that a pullback could occur with even a minor catalyst.”

Could the lack of a tax reform deal be that catalyst?

“While the lack of a deal would likely be disappointing, we don’t believe economists or analysts have yet built the expectation for tax reform into forward-looking estimates; so the effect is likely to be more psychological than numerical,” she writes.

So be on your toes, but don’t overreact.

“Global and domestic economic growth, along with a solid earnings picture and a potential tax reform tailwind, suggest investors should remain at their target equity allocations,” Sonders says, bottom-lining it for investors. “Pullbacks are possible, but a recession doesn’t appear to be in the cards in the near term, which historically has meant the risk of a pullback turning into a bear market is low.”

Key market gauges

The Nasdaq is shrugging off minimal declines early to push deeper into positive territory. The Dow and the S&P /zigman2/quotes/210599714/realtime SPX +0.78%  are off just fractionally.

Across the pond, stocks /zigman2/quotes/210599654/delayed XX:SXXP -0.67%  were mostly higher, led by Spain’s IBEX 35 /zigman2/quotes/210597995/delayed XX:IBEX -1.62% strong push after hundreds of thousands of pro-unity demonstrators rallied in Catalonia. Asian markets /zigman2/quotes/211618636/realtime XX:ADOW +0.39% were a mixed bag.

Bitcoin /zigman2/quotes/31322028/realtime BTCUSD -0.38%  just took out yet another high, moving above $6,300 and, once again, moving past Goldman Sachs /zigman2/quotes/209237603/composite GS +1.45%  in terms of market cap. Read: After toppling Goldman, bitcoin sets its sights on Apple.

The buzz

Donald Trump’s former presidential-election campaign manager is among the first to get nailed by the Mueller investigation. Paul Manafort and his former business associate Rick Gates were told to surrender to federal authorities on Monday, The New York Times reported.

Ahead of that news, Trump, of course, kept his Twitter finger busy denying any collusion with Russia and calling on Republicans to “DO SOMETHING!” against his political opponents.

Apple /zigman2/quotes/202934861/composite AAPL +2.33%  takes its no-leak stuff pretty seriously when it comes to product launches, just ask this poor girl whose dad lost his job.

/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
10,492.50
+148.61 +1.44%
Volume: 3.67M
July 8, 2020 5:16p
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
26,067.28
+177.10 +0.68%
Volume: 337.30M
July 8, 2020 4:58p
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/zigman2/quotes/209509471/composite
US : U.S.: Nasdaq
$ 45.81
+0.18 +0.39%
Volume: 15.02M
July 8, 2020 4:00p
P/E Ratio
18.18
Dividend Yield
3.14%
Market Cap
$192.66 billion
Rev. per Employee
$684,933
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/zigman2/quotes/203649727/composite
US : U.S.: Nasdaq
$ 58.61
+0.30 +0.51%
Volume: 13.28M
July 8, 2020 4:00p
P/E Ratio
11.35
Dividend Yield
2.25%
Market Cap
$246.88 billion
Rev. per Employee
$659,665
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/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 3,081.11
+80.99 +2.70%
Volume: 5.04M
July 8, 2020 4:00p
P/E Ratio
147.18
Dividend Yield
N/A
Market Cap
$1496.39 billion
Rev. per Employee
$359,671
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/zigman2/quotes/201281754/composite
US : U.S.: NYSE
$ 34.43
+0.54 +1.59%
Volume: 6.92M
July 8, 2020 4:00p
P/E Ratio
13.43
Dividend Yield
2.09%
Market Cap
$43.63 billion
Rev. per Employee
$563,538
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/zigman2/quotes/210599714/realtime
US : S&P US
3,169.94
+24.62 +0.78%
Volume: 2.39B
July 8, 2020 4:58p
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/zigman2/quotes/210599654/delayed
XX : STOXX
366.48
-2.48 -0.67%
Volume: 0.00
July 8, 2020 11:03p
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/zigman2/quotes/210597995/delayed
XX : Spain: Madrid
7,326.40
-121.00 -1.62%
Volume: 213.49M
July 8, 2020 5:38p
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/zigman2/quotes/211618636/realtime
XX : Dow Jones Indices
3,216.18
+12.46 +0.39%
Volume: 0.00
July 8, 2020 9:58p
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/zigman2/quotes/31322028/realtime
US : CoinDesk
9,399.22
-35.74 -0.38%
Volume: 0.00
July 8, 2020 9:57p
loading...
/zigman2/quotes/209237603/composite
US : U.S.: NYSE
$ 202.25
+2.89 +1.45%
Volume: 2.79M
July 8, 2020 4:00p
P/E Ratio
10.99
Dividend Yield
2.47%
Market Cap
$68.56 billion
Rev. per Employee
$1.34M
loading...
/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 381.37
+8.68 +2.33%
Volume: 29.27M
July 8, 2020 4:00p
P/E Ratio
29.90
Dividend Yield
0.86%
Market Cap
$1615.36 billion
Rev. per Employee
$1.98M
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