What are investors missing when it comes to this latest rally? Seemingly nothing can derail it, as the surge higher continued in the stock market today as well. New highs were hit across the board in Monday’s session, with the S&P 500 and Nasdaq Composite notching new highs.
Despite the big moves we’ve seen in individual stocks and the overbought nature of certain assets and indices, the markets just keep on chugging higher.
While the markets enjoyed a robust 2019 — where the S&P 500 returned over 33% with dividends — don’t forget the bear market. Many won’t consider it that, but the index shed 20% from peak to trough in the fourth quarter of 2018.
It was fast, it was chaotic and it was more than anyone had expected. But it set us up for a powerful run in 2019. Particularly with the Federal Reserve shifting from a hawkish to a dovish tone. Investors need to realize this and consider that we didn’t exactly come roaring into 2019 at the highs. Heck, the Russell 2000 still hasn’t made new highs.
So is it a fatal flaw to lock in some profits and be distrusting of the rally? No, it’s not a crime. But to continually bet against a powerful move and failing to recognize where the market came from only makes things harder.
Let’s hope that we get some good earnings, but some mild sell-the-news action will help digest the big run we’ve had over the past few months. Remember, earnings start tomorrow morning with Citigroup (NYSE:C), JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC) and Delta Air Lines (NYSE:DAL).
Movers in the Stock Market Today
Driving home the point to not get in the way of a surging freight train or to remain dug in on a stubborn position? Tesla (NASDAQ:TSLA). Shares erupted 9.8% to $524.86, blowing right through the key $500 level. Last week, it looked like it could be setting up for a reversal, but apparently that was just a pause.
Helping fuel the move on Monday was a call from the analysts at Oppenheimer. A number of analysts have thrown out price targets in the $500 range, with the latest coming from Piper Sandler on Friday (and weighing in at $553). However, Oppenheimer took it further, assigning a price target of $612 on Monday. Holy moly.
Five Below (NASDAQ:FIVE) was hammered more than 18% at one point, although it curbed its losses to “just” 11.4%. While holiday sales rose 13.4%, comparable-store sales sank 2.6% for the period. As a result, management had to lower its fourth-quarter comp-store sales outlook to a range of -2% to -2.5% from a prior range of up 2% to 3%.
It also lowered its full-year comp-store sales outlook and issued fourth-quarter guidance below Street expectations. Management’s full-year sales and earnings outlooks also came up short of expectations.
Despite leading the pack in terms of nominations, Netflix (NASDAQ:NFLX) struggled at the Golden Globes, and I noted that the company would have a chance at redemption at the upcoming Oscars. On Monday, it was announced the company snagged 16 nominations for event, which helped give it a 3% boost on the day.
Heard on the Street
The more the market goes up, the more upgrades we seem to get. That didn’t stop on Monday, with buy recommendations and Street-high targets flooding the headlines.
Let’s start with the biggest of them all — Apple (NASDAQ:AAPL) — which hit a new high on the day as well. D.A. Davidson slapped a Street-high target of $375 on Apple, which implies almost 20% upside from current levels. The analyst is bullish on the 5G iPhone.
Credit Suisse analysts bumped their $155 price target on Microsoft (NASDAQ:MSFT) up to $180. That goes alongside their rating of “very bullish.”
While JPMorgan’s Stephen Tusa remains bearish, that’s not stopping his peers from warming up to General Electric (NYSE:GE) — at least in the short term. Deutsche Bank analysts called GE stock a short-term buy, while keeping a “hold” rating and $12 price target on the stock. Despite the call, shares rallied almost 3.9% to $12.12.
Skyworks Solutions (NASDAQ:SWKS) rallied 3.7% after analysts at B. Riley upped their price target to $145 from $115, implying over 16% upside. Many chips did well today, like Nvidia (NASDAQ:NVDA), which received its second $300 price target in as many trading sessions, this one compliments of Evercore.