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Why the Stock Market is Going to Continue Climbing Higher
Louis Navellier
Louis Navellier
As you may know, I do not like August since it is a seasonally weak month for the stock market. What tends to happen is that lots of folks, especially traders in Europe and many on Wall Street, go on extended vacations, so “air pockets” can materialize.
I also anticipate both sales and earnings momentum will be decelerating in the upcoming months.
As an example, my average Breakthrough Stock’s sales and earnings are forecasted to slow to an annual pace of 83.2% and 377%, respectively. Essentially, this means that my Breakthrough Stocks are decelerating from 200 mph to about 178 mph! So, while they might be slowing down a tiny bit, they’re still
fundamentally superior
in my book.
Now, you may have recently caught wind of the “Chicken Littles” that the media likes to glorify. They’ve been busy issuing warnings that the U.S. economic growth has “peaked,” and the Covid-19 Delta variant will resume shutting economies around the world.
Although fear is good for media ratings, I would like to thoroughly explain why we are only in the fourth inning of a robust economic recovery and why the stock market is going to continue to meander higher.
Let’s start with second-quarter GDP, which has apparently barely accelerated over first-quarter GDP growth. Specifically, the preliminary estimate for second-quarter GDP from the Commerce Department’s U.S. Bureau of Economic Analysis came in at an annual rate of only 6.5%, which was substantially below economists’ consensus estimate of 8.4%.
The good news is that personal consumption recently rose at an 11.8% annual pace, which was significantly higher than economists’ consensus expectation. There are going to be multiple revisions to the second-quarter GDP estimate, but there is no doubt that the weaker-than-expected preliminary GDP report will provide the Federal Reserve more time to sustain its accommodative policy of low-interest rates and aggressive quantitative easing.
In the meantime, due to supply chain glitches, there is a strong order backlog, so I expect that third-quarter GDP will likely sustain at least 6% annual GDP growth.
Second, Modern Monetary Theory (MMT) — which, in part, asserts that it’s only limit to money creation is inflation — remains alive and well in Europe after the European Central Bank (ECB) boosted its quantitative easing and declared that it would not change interest rates until inflation reached a 2% annual rate.
This ECB action weakened the euro and caused foreign capital to pour into the U.S. seeking positive yields, versus the negative yields that are all too common in Europe.
The truth of the matter is that the U.S. is also embracing MMT and we are also on the path to negative interest rates, but first we have to break a few key thresholds, like the 10-year Treasury bond falling and staying below the 1.2% level in the upcoming months. Currently, the 10-year Treasury bond is just below that at 1.19%.
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Now, in my Breakthrough Stocks Monthly Issue, which comes out tomorrow (and is available to all
Platinum Growth Club
subscribers), I lay out three other key factors why I want you to invest with confidence and not worry about seasonal shenanigans or naysayers in the media.
The bottom line is that whatever deceleration the financial media is talking about for the S&P 500 is not really relevant for my
fundamentally superior stocks
.
For example, in the past three months, my average Breakthrough Stock has had its consensus earnings estimate revised 23.8% higher, which bodes well for more earnings surprises in the upcoming months. Meanwhile, 15 of my Breakthrough Stocks surged 7% to 20% in the past month and there are still more quarterly earnings announcements to be released in early August.
Buying the Crème de la Crème
Due to the current “Goldilocks” environment from low Treasury bond yields and strong earnings, the remainder of the year remains very positive. So, any pullbacks in the upcoming weeks will likely be great buying opportunities.
And I’m pleased to say that my
Platinum Growth Club
subscribers are perfectly positioned to benefit from these trends and much more.
You see, I have more than 100 stocks across all of my services
(plus 45 LEAPS call options, or Long-term Equity Anticipation Securities in my Power Options trading service), and each and every one boasts strong earnings and sales growth.
Of course, you don’t have to invest in all 100+ stocks. If you’d rather start small, I’ve got you covered there, too. My
Platinum Growth Club
service comes with my exclusive Model Portfolio.
I handpick all of my Model Portfolio recommendations from my different stock services – Growth Investor, Breakthrough Stocks and Accelerated Profits – so you can rest assured that you’re always invested in the
crème de la crème
.
In addition to
access to my stocks and options recommendations
, you can read every single Weekly Update, Monthly Issue, Market Alert and Trade Alert, as well as exclusive podcasts and Live Chat events. Plus, you’ll receive a
Platinum Growth Club
Monthly Issue at the beginning of each month. In my latest
Platinum Growth Club
Monthly Issue, released on Monday, I recommended seven brand-new buys that boast
superior fundamentals
and are well-positioned to climb higher in the months ahead. And in last Friday’s Growth Investor Monthly Issue for August, I unveiled three defensive, high-growth stocks that I anticipate will be incredibly resilient in the upcoming weeks. These issues are available to you as soon as you sign u
p.
The bottom line: If you want to make sure your portfolio is “locked and loaded” with
fundamentally superior stocks
that will do well in the volatile month of August and the longer term, then I encourage you to sign up for
Platinum Growth Club
today.
For full details, click here
.
Sincerely,
Signed: Louis Navaillier