Hilary Kramer, editor in chief at GameChangerStocks.com
Focus: U.S. equities
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MARKET OUTLOOK
Wall Street is trying to navigate a kind of limbo between rich valuations — 35 per cent of U.S. stocks are within 10 per cent of a 52-week high — and frustratingly elusive growth signals. While people are fairly comfortable holding here, it's hard to justify going all-in on equities until you can see relief on the P/E math, especially when the Fed keeps rumbling about tightening easy money. The status quo is far from bad and prices are far from unsustainable. Our math actually indicates that there's room for the S&P 500 to creep significantly higher without stretching the limits of statistical comfort. It's just that with sector after sector failing to assert the leadership we were hoping to see, there's a lot of back-and-forth rotation as we chase incremental value and quarter-to-quarter growth.

Meanwhile, the Fed and other macro factors remain in the background, occasionally rising to the surface of market chatter whenever traders run out of patience, optimism or both. The rate curve and the dollar are a drag. When there isn't a whole lot on the horizon to get excited about, it doesn't take a lot to shock sentiment on a morning when the news just doesn't flow your way. The long view still looks great — real earnings growth will do amazing things to the numbers after close to two years of overall EPS deterioration — but until we see it, look for more sideways short-term action and a lot of rotation with a subtle upward bias. The mood is lifting; it's just tentative. 

CATALYSTS TO WATCH

1. The election. Political uncertainty drives market volatility. This election in particular could still be bumpy.
2. Oil. Prices have stabilized here around $50 but now we need to see if it's a ceiling or a floor. 
3. Inflation. Stable fuel prices take the Fed's kid gloves off, maybe driving a December hike. 
4. MMM and CAT earnings on Tuesday. Industrials and materials are hurting. Let's weigh the trend.
5. Brexit. Still a shadow on global GDP depending on headlines and execution. 

TOP PICKS

DOMTAR (UFS.N)

AMAZON (AMZN.O)

BRISTOL-MYERS SQUIBB (BMY.N)
 

TWITTER: @HilaryKramer
WEBSITE: www.hilarykramer.com