Harvey Eisen on What Can Keep the Market Moving Higher
Long-time market observer and frequent guest on the once popular Wall Street Week program, Harvey Eisen, provided his outlook for the markets to CNN’s Lou Dobbs (see video below). Eisen noted that markets don’t go straight up and indicators he follows show the market is overextended. Investors should expect a 3-5 percent pullback, at a minimum, he said.
Eisen said we’re in a bull market because the Fed has dictated it and the money supply is growing out of control and they’re going to “keep the pedal to the floor.” The bad news, according to Eisen, is you’re going to get a correction.
When asked by Dobbs if a 3-5 percent correction would build a foundation for its next advance, Eisen humbly said he’s been at this game long enough that he doesn’t know the answer. His analysis of the data shows 3-5 percent is a normal correction and 5-8 percent if its a little bit tougher. Eisen said “you need people to say, wait minute, this has really gotten scary.”
Dobbs asked Eisen to give his take on Europe’s influence on U. S. markets, to which Eisen replied, “the dollar is at a new low versus the euro, you cannot make this stuff up…I mean what are they thinking about.”
Eisen said the problem we have is the slow economic recovery, high unemployment, and no inflation. “What they are doing with the money supply would be illegal in any other business,” Eisen quipped.
Eisen said the market is threatening the highs of five years ago, while earnings are 20 percent higher than five years ago. “It’s unbelievable how cheap these things are,” Eisen added, while, “75 percent of companies are beating street estimates, the economy is doing better, and earnings are going up.”
The slow growing economy is great news for the market because it allows the Fed to keep pumping the money out, Eisen concluded.
Early last year Eisen said the market would continue to perform well based on his reading of history [link].