Cross-Asset Strategist & Quantitative Analyst, Pennock Idea Hub

Cam Hui

Cam Hui has been professionally involved in the financial markets since 1985 in a variety of roles, both as a quantitative equity portfolio manager and as a sell-side analyst. He graduated with a degree in Computer Science from the University of British Columbia in 1980 and obtained his CFA Charter in 1989.

Cross-Asset Strategist & Quantitative Analyst

Pennock Idea Hub

We are creators of independent equity research. The Pennock Idea Hub team are veterans of the investment industry. Much of our team has spent their careers at Merrill Lynch, Deutsche Bank, RBC Capital Markets and Wood Gundy. We have taken every aspect of research back to the studs and returned to first principles. The Pennock Idea Hub marries the interests of the sell and buy side. 

We offer the best research for institutional investors by:

-Only publishing research from veteran analysts
-Eliminate the inherent conflicts of the traditional sell and buy side relationship
-Ensure our team is always accessible; collaboration with clients nurtures our collective success

Cross-Asset & Quantitative Research

Thematic (Sector/Industry)

United states / Thematic (Sector/Industry)

About a month ago, we suggested that the market was in need of a valuation reset, and outlined a price and forward P/E range for the market (see <a href="https://www.smartkarma.com/insights/powell-s-dilemma-and-why-it-matters" target="_blank" rel="noopener">Powell's Dilemma (and Why It Matters)</a>). Since then, the index has weakened into the top of my projected range, followed by an upside breakout from a month-long trading range.
Is it time to buy the breakout?
We believe the decision to chase the S&amp;P 500 upside breakout is dependent on investor time horizon. The combination of crowded short sentiment levels and positive price momentum can lead to powerful price surges. Traders can therefore take advantage of these conditions to ride the rally. The S&amp;P 500 could rise to test, and possibly exceed, the previous all-time highs in the coming weeks.
However, the longer-term viewpoint is less bullish. Investment-oriented accounts should take advantage of the market strength to fade the rally if they are overweight equities and rebalance to either a neutral or an underweight position. Valuations are stretched, the earnings outlook is mixed and macro tail-risks remain unresolved.

About a month ago, we suggested that the market was in need of a valuation reset, and outlined a price and forward P/E range for the market (see Powell's Dilemma (and Why It Matters)). Since then, the index has weakened into the top of my projected range, followed by an upside breakout from a month-long trading range.
Is it time to buy the breakout?
We believe the decision to chase the S&amp;P 500 upside breakout is dependent on investor time horizon. The combination of crowded short sentiment levels and positive price momentum can lead to powerful price surges. Traders can therefore take advantage of these conditions to ride the rally. The S&amp;P 500 could rise to test, and possibly exceed, the previous all-time highs in the coming weeks.
However, the longer-term viewpoint is less bullish. Investment-oriented accounts should take advantage of the market strength to fade the rally if they are overweight equities and rebalance to either a neutral or an underweight position. Valuations are stretched, the earnings outlook is mixed and macro tail-risks remain unresolved.

Should You Buy The S&P 500 Breakout?