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Canally: Expect Increased Volatility Ahead

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  • Description

    LPL Financial vice president John Canally explains why the market is due for a pullback.

  • Duration 3:53
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The call.

All right well the Dow is on track to snap a six month winning streak enough let's guess as well he expects increased volatility in the coming months joining us now is John -- -- -- -- vice president.

Investment strategist with LPL financial John thank you for joining us.

We've been hearing from all sorts of people in the market is due for a pullback why do you believe that's the case.

Well you know we've been tracking ten key indicators that -- that.

Look debt.

Eight a spring slide both in 2010 and last year and a lot of those key indicators.

Are tracking the exact same way they did back in 2010 and last year so we expect a spring slide here.

You know you're you're you're coming up on the end of earning season typically that is.

That marks the beginning of a period in stocks that that don't do so well -- and there's there's there's a couple other room.

Reasons why you know you're you're getting to the period of the year where -- Presidential election to become a little bit more important -- -- still a tremendous some amount of volatility there.

A lot of uncertainty was through with regard -- this fiscal cliff that's coming up bad deed the end of the year so I think the about the volatility that we really haven't seen too much up maybe April we saw some of it.

I think that might.

Be with us throughout the spring and summer I was last year.

Donna problem though is that I'm -- go I mean it's very hard to it to discount these earnings you know are in these numbers Dow up 8% year to -- NASDAQ up 17%.

Seeing no you selling she -- away but -- your people gonna want.

-- It's is -- economy we.

-- our target for the year was to be up between.

Eight and 12% we got there roughly in February we've been.

Taking off risk since then looking for this pullback and I think the place to go might be.

You know just a little bit of cash a little bit of cautious of step out from that might be in the mortgage backed area.

But within the stock market itself it's kind of difficult to -- to nowhere to hide.

You know right now we we do like industrials we like technology.

But I think if we if we start to flip around the stock start to sell off.

Probably don't wanna be in those two sectors for too long night John what about the earnings season so -- pretty impressive -- mean is this based on fundamentals and is -- Bob just sent.

Way too low how much we read into this.

I think this quarter you -- the the situation -- the bar or got set a little bit too low and were.

Now beating that those lowered expectations looking ahead.

If if you look what companies have guided for for the rest of this year and into 2013.

That guidance is relatively flat that's one of those ten -- slide and indicators were were looking for and maybe that those that guidance has.

Started to -- ballad that roll over bid that's another good sign that we we may be due for you turn around here.

Can -- Obama actually said I mean you know until you flat guidance concurrent has been mixed at best right again we -- -- it on purpose.

So that we keep the bar really -- expectations that and then -- -- that way you know lot we can jump over the bar again again is that.

Quarter.

Yeah war we've stayed sort of in that game for a while our I mean we've we've went to reg FD what do 1990 -- -- night so.

I think companies are used to doing this so I think the real issue among.

And investors is you know -- our profit margins at their peak and so I think -- -- take a look at that and if you're doing a lot more hiring.

That's probably gonna eat into profit -- lot more than anything else we we did -- a lot of companies in the first quarter.

Do share buybacks do dividend announcements.

So so those things are being used for -- would have to do.

If if they take all the cash they -- do some hiring I think that's gonna hit you know really into margins and then you get China slowing get up a stronger dollar that's gonna -- as well right John Kennelly of LPL financial thank you so much for joining us appreciate it.

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