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The Day Ahead: Stuck On a Lame Exercise Tape

Scared to Make a Call

I sure am laying eyes on the S&P 500 approaching strategists' full-year value objectives, yet I'm making no real bold calls in either direction regarding the next move. If we begin to get modest upward hikes in year-end S&P 500 targets, the market may boil them down as unworthy of incurring the extra risk. In other words, the risk-reward scenario would be unfavorable.

Where Are the Players At?

One thought I am wrestling with is that, in September, when the market's ballerz return to action, will they really want to get long a market sent higher by machines and rookies? The core fundamentals -- meaning corporate sales and earnings -- are uninspiring. Further, the risk of being horribly wrong into the back half is too great a threat when it comes to buying stocks today at higher valuations vs. June.

The rally feels as if it's losing some steam, so play it close to the vest. Have you scored a profit on a core position? Great -- book it and wait to see if the market hurdles over key technical resistance points that would aid in sucking in others.

Morning Quickie

The retail space has officially become a brutal place to pick stocks. Best-in-breed names are known, and the valuations reflect the fact that their fundamentals are best in show. A few companies that come to mind in this department are Gap (GPS - Get Report), Ulta Salon (ULTA - Get Report), Target (TGT - Get Report), Home Depot (HD - Get Report), TJX (TJX - Get Report) and Michael Kors (KORS - Get Report). I remain upbeat on Gap, Home Depot and TJX -- I just want them at cheaper prices if possible.

As for the fundamental horror stories, they will stay that way for the foreseeable future. If I had a gun to my head, I'd underweight Guess (GES - Get Report), a globally exposed brand that has had a stock gone haywire amid subdued European Union news flow instead of positive company-specific news. The risk is high for a tepid guidance outlook to smack the stock in the face.
At the time of publication, Sozzi had no positions in the stocks mentioned, although positions may change at any time.

Brian Sozzi is Chief Equities Analyst for NBG Productions. In this capacity, he is responsible for developing independent financial content and actionable stock recommendations (including ratings and price targets) for an institutional and retail investor base. In addition, Sozzi is the Editor in Chief of the "Decoding Wall St." investor education online platform.

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Chart of I:DJI
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