Stock-market bulls are in ‘firm control’ — but here’s where ‘vulnerabilities kick in’

It’s looking lovely for the stock market’s true believers at the moment, as the Nasdaq gets acquainted with the 8,000 level, while the Dow says “nice to see you again” to 26,000.

“The bulls have firm control here, as a market breaking out of prior all-time highs is as bullish as it gets,” says Chris Weston, Pepperstone Group’s head of research.

“Sure, the bears can focus on valuation and fairly concentrated breadth,” he adds. However, Weston suggests he’s not worrying about the market’s pricey-ness yet — and then he gives the spot where he expects to see more trouble.

“The S&P 500 on 16.8X consensus forward earnings is lofty, but there is scope for the market to push this to 18X before real vulnerabilities kick in,” he writes, delivering our call of the day.

“So I am happy to remain long here, with conviction increased on a weekly close through 2,872, while ideally, one would want to see new highs in the Dow and Dow transport index, too.”

Strategist Ed Yardeni also notes the S&P 500 is trading at just below 17 times forward-year estimated earnings. And Yardeni is pushing back against talk that the market’s breadth stinks, point out that it’s not just all about FAANGs, as small caps and mid caps are performing well, too.

Meanwhile, Jeremy “Stocks for the Long Run” Siegel has been emphasizing that “we are much less, so to speak, overvalued” than just before the dot-com bubble popped in 2000. “It feels like pretty reasonable valuation,” the professor said to CNBC, highlighting that the S&P changed hands 18 years ago at about 30 times trailing earnings.

Key market gauges

Futures for the Dow YMU8, +0.16%  , S&P 500 ESU8, +0.14% and Nasdaq-100 NQU8, +0.28% are slightly higher. That’s after the Dow DJIA, +1.01% yesterday closed above 26K for the first time in six months as the U.S. and Mexico made a deal on trade, while the S&P SPX, +0.77% and Nasdaq Composite COMP, +0.91% notched all-time highs for a second session in a row.

Europe SXXP, +0.14% is mostly rising, after Asia finished with gains. Gold GCZ8, +0.35% is advancing, oil CLV8, +0.06% is little changed, and the dollar index DXY, -0.23% is dipping. Bitcoin BTCUSD, +4.52% is trading around $6,900.

See the Market Snapshot column for the latest action.

The chart

Many traders are poking fun at the bears these days, including the folks at StockTwits as they share the chart above from Jon Boorman, a portfolio manager at Broadsword Capital.

“Who will try next?” the StockTwits crew says in a tweet. “Here’s the S&P 500 next to all the people who tried to call a top.”

The bears are still growling, of course:

The buzz

Lots of Twitter users are retweeting a fake Warren Buffett account that has been giving advice along these lines:

Tesla TSLA, -1.10% news: Apple AAPL, +0.82% buying the car maker may not be so ridiculous right now, and Elon Musk is not expected this week at Burning Man.

Short sellers of AMD AMD, +5.34% have faced destruction in 2018, losing nearly $3 billion on paper.

President Trump is attacking Google GOOG, +1.73% GOOGL, +1.58% for prioritizing the MSM in its search results.

Trump’s deal with Mexico offers a template for ending the trade fights with Canada and Europe — and maybe China, but that will be hardest of all.

This Nomura chart shows all sorts of “event risk” ahead.

DSW’s stock DSW, -0.58% is soaring premarket after the shoe seller posted earnings ahead of the opening bell. Tiffany TIF, -1.27% and BJ’s Wholesale Club BJ, -6.58% also look set for gains, but Best Buy’s shares BBY, -0.51% are down premarket after its report.

Reports on home prices and advance trade in goods are due before the open, then a reading on consumer confidence is on tap once trading is underway.

Check out: MarketWatch’s Economic Calendar

U.K. Prime Minister Theresa May is saying a no-deal Brexit “wouldn’t be the end of the world.”

The quote

Getty Images

“Some people, myself included, have been a little frustrated with the ‘hug-the-president’ approach. But that’s the reality of winning a GOP primary in Arizona in this current political climate.” —Yasser Sanchez, an immigration lawyer and Republican activist who supports Martha McSally, talks to the Guardian newspaper about how candidates have competed to prove they align with Trump.

McSally, a congresswoman, is battling against Joe “America’s Toughest Sheriff” Arpaio and Kelli Ward, a former state senator, in today’s Republican Senate primary, which has been roiled by John McCain’s death. Florida and Oklahoma also are holding primary elections today.

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Tensions for Manchester United MANU, +2.38% are reaching a boiling point.

This “Bee Man” video shows him flushing out hundreds of hornets.

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There’s a way to get $10K for 18 seconds:

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