Beware of investors stacking up in stocks and instead hope for a steady rise, says the strategist

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<pre><pre>Beware of investors stacking up in stocks and instead hope for a steady rise, says the strategist

Ready or not, here comes the winning season.

FactSet estimates that Wall Street expects S&P 500 earnings to decrease 2% in the fourth quarter compared to the year-ago period, compared to the 2.5% forecast at the beginning of this quarter. However, financials should be a bright spot in this mix, and JPMorgan Chase started some optimistic results on Tuesday.

The week started with some new stock records and trading hopes, so no pressure, right?

Our Call of the dayMark Luschini, chief investment strategist at asset manager Janney Montgomery Scott, warns that a lot has to happen for stocks this year, and the last thing investors want is an overwhelmed rush into this market.

"If we experience a FOMO environment (fear of not coming back) in which the [S&P] Market floors up to 3,500 and we have 20x earnings growth and global recovery history is not developing and the dollar is strengthening as a result. "This would detract from earnings and make stocks vulnerable," he told MarketWatch in an interview.

The S & P 500 is currently trading 18x futures, which is not inappropriate, he says, but he says equities cannot continue to grow unless earnings develop positively. This is after last year's “remarkable” 28% return for the S&P 500, which is largely due to an increase in prices rather than steady earnings growth, he notes.

"I would certainly prefer to set it a little higher so that the fundamentals can continue to grow in a way that can keep up with the rise in share prices. One confirms the other," said Luschini. And that's how political and trade issues are expected to remain a focus this year.

"Anything can happen. There are things that can undermine this economy, or at least the stock market, that I'd be a little prepared for if I don't assume that 2020 will make money as easily as 2019," he said.

Read: Trader revisits Ray Dalio's ridiculous money call and warns of a similar decline

The market

Dow

YM00, -0.06%.

S & P

ES00, -0.14%

and Nasdaq

NQ00, -0.11%

Futures are roughly flat, while European stocks

SXXP, + 0.10%

fight and Asian markets

Adow, + 0.38%

ready mixed.

The graphic

Investors' exposure to stocks is increasing and increasing, as can be seen from our Deutsche Bank chart, which shows that the position is now in the 96th percentile.

"Stock positioning, like the market itself, has far outpaced current growth as investors praise a recovery in global growth," said a recent statement by chief strategist Binky Chadha and a team from the bank.


The buzz

JPMorgan Chase

JPM, + 0.83%

reported earnings and sales above forecasts, and stocks have risen. Wells Fargo

WFC, -0.74%

and Citigroup

C., + 1.77%

are still coming. (Read preview). Delta Airlines

DAL, + 0.42%

also climbs positive results.

Visa

V, + 0.81%

pays $ 5.3 billion for Plaid financial technology, which allows users to link bank accounts to mobile apps.

According to BlackRock, climate change is about to restructure financing

BLK, + 2.13%

Founder Larry Fink announced steps to make sustainability "the focus of our investment approach".

A survey on small business confidence and consumer prices is pending.

Random readings

Live bullets, tear gas from Iranian security Protests against crashed Ukrainian plane are increasing

Democratic presidential candidates Elizabeth Warren and Bernie Sanders Gender slugfest

The oldest material in the world discovered in a meteorite

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