Market strategist Michele Schneider explains why the bull market could be entering “the seventh inning.”
Transcript:
Caroline Woods: Joining me now, Michele Schneider, Chief Strategist at MarketGauge. Michele, great to have you here at the desk.
Michele Schneider: So great to be here and see you in person. Thanks for having me.
Caroline Woods: Yes thank you for joining us here in person. So a lot going on this week. Markets have been bouncing back and forth across the unchanged line. Sort of a mixed picture right now. Talk to us about the biggest market catalyst you’re watching right now?
Michele Schneider: Well when you say catalyst I’m assuming you mean a good thing right. Because there’s some headwinds in there, some tailwinds. So if we’re looking at the tailwinds right now, we would have to say earnings is probably number one tariff reduction or at least talk of some more sanity in terms of tariffs. Number two interest rates and yields going lower. Number three so I think that’s really right now what’s keeping us near these all time highs. Sticking with the tailwinds. And then we’ll get to the headwind. I think despite the fact that we do have those tailwinds, the market also has pretty high valuations at this time.
Caroline Woods: So is this still a market that you want to invest in or do you want to wait for better entry points?
Michele Schneider: Well, I’m a trader primarily. So generally I am not one who suffers from FOMO, right? I dips, I like to see weakness against major support areas to get in. So I know of my risk is. So for me, this is a happy time that we might get some correction.
Caroline Woods: OK, so a happy time if we get some correction. Let’s talk about what could potentially cause a correction. What are the biggest risks or headwinds to the market right now?
Michele Schneider: Well, a couple of things. Number one is you mentioned overvaluation. And I love this quote by Mae West. Too much of a good thing can be wonderful. And so I think it was that incredible optimism at high valuations situations that can create a topping pattern. You know, maybe we’re in the seventh inning of this bull market anyway. We don’t know. But the other really more specific things would be the regional banks. They had their little mini flush last week because of the scare. However, that Cre, which is the ETF, still not really performing well. The consumer area, which I like to look at it for, SRT is still under the 50 day moving average, which means caution. So those are two areas I think you have to watch. And those small caps are going to be tied to both. So if you look at just those three areas alone, they’re not really doing what we’ve been seeing particularly with the mag seven.
So easier to make the case that this is a market that moves higher or lower. I would say right now we’re in a getting into a strong seasonality of up. But if we cannot see the consumer in particular really going out there and spending ahead of the holiday a season, then it could be a pretty good correction on the way. Pretty good correction 10% or so. Well, barring any credit default or, you know, some other sort of geopolitical situation, some kind of a supply chain issue, I would say probably 10% to 15%
Caroline Woods: OK all right. But that would make you happy because you would say it’s a buy opportunity. We’ve seen a really impressive comeback in Apple shares. It’s approaching $4 trillion in market cap. Talk to me about the significance of that. Make you a believer in Apple?
Michele Schneider: Well I’ve always been a believer of Apple. I mean everything I have is Apple right. And actually, you know, thinking about upgrading the phone again because the new apples are getting better and better, particularly if you like taking pictures like we do. But the bigger thing to me is that Apple is very much a cyclical stock. Related to the consumer. And that’s one of the areas with AI. We have to watch because outside of the meatus. And the Google’s and the Amazons, those OpenAI and those smaller companies need the consumer to buy. And so Apple would be one of those examples. And if the consumer is in there buying the technology and a believer in the future of Apple related to AI, then that would be a very positive thing for the stock and most likely another tailwind for the market overall.
Caroline Woods: Do you think that consumer is strong enough to keep spending a lot of money on Apple products?
Michele Schneider: We’ll see. I wouldn’t make that statement boldly, but right now at least, it’s better than what I would have expected.
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