Investor Sentiment 'Frothy,' but Stocks Still in a Bull Market


NEW YORK (TheStreet) - As the broader market continues to go higher, Liz Ann Sonders, chief investment strategist at Charles Schwab, says investor sentiment seems to be getting "frothy" once again. That's not to say a correction is looming, just that the market seems somewhat vulnerable.

On Thursday's CNBC "Fast Money Halftime Report," Sonders reiterated that she's still positive on what she sees as a secular bull market. And while there may be more volatility in 2015, it will likely be short-lived, she said. Her top sector picks include industrials and technology. 

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Add financials to that list, said Pete Najarian, co-founder of and, who also likes large-cap tech and industrial stocks. "We've got plenty of upside," he added. 

If the Federal Reserve increases interest rates in 2015 as expected, volatility will rise, said Stephanie Link, chief investment officer of TheStreet and co-manager of the Action Alerts PLUS portfolio. However, a rate hike would be justified because the economic data continues to be strong, she noted.

The Fed will be accommodative next year even if the economic environment remains strong, making it be a good year for stocks, Rosecliff Capital founder Mike Murphy added.

The conversation shifted to Wal-Mart (WMT) , with UBS analyst Michael Lasser explaining to the Fast Money panel his downgrade of the retail giant's stock to neutral.

Although lower gasoline prices will help the company's customers, that boost in sales already seems priced into the stock, which has rallied 10% in the past month. Overall, Lasser is optimistic on the holiday shopping season and still has a price target of $91 on the stock.

After the big move higher, Najarian said he understands the downgrade. However, the stock can continue to rally as gas prices continue to drop and e-commerce remains strong, he said.

Murphy added that there are several catalysts, such as a dividend hike, that can push Wal-Mart shares higher. 

At 16 times next year's earnings, the stock doesn't seem to have a lot of upside, Link argued. Instead, she likes the dollar store stocks, as well as Costco Wholesale (COST) . 

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The trading panel's focused turned to Japanese equities, on bullish comments from David Snoddy, managing partner at Nezu Asia Capital Management. 

Snoddy said the consumption tax hike that occurred in April hurt Japan's third-quarter GDP. He expects the result to be revised higher. Add to that a 70%year-over-year increase in stock buybacks, massive quantitative easing and the upcoming election, and things are looking up for Japanese stocks, exporters in particular.

"I like Japan," Link said. She agreed that equities have an attractive valuation and the country's stimulus should have a positive effect on the stock market. 

Murphy likes Sony (SNE)  for its bullish price action that seems likely to continue higher. 

The traders' "Under The Radar" picks were a mixed bag.

Link likes Starbucks (SBUX) , which hosted its investors day on Thursday. The company had revenue of $16 billion in fiscal 2014, but expects that to grow to $30 billion by 2019. She likes the company's long-term outlook. 

Investors looking to buy CSX Corp. (CSX)  should use the current pullback as an opportunity to get in, Murphy said. Najarian added that shipping volumes for the transportation company remain strong.

Najarian's "Under The Radar" pick is United Technologies (UTX) , which has short-term bullish options activity

For their final trades, Najarian and Link are buying United Technologies, while Murphy likes Halliburton (HAL) . 

-- Written by Bret Kenwell

Follow @BretKenwell

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