3 reasons why you shouldn’t buy into the S&P 500’s breakout effort

It’s time to take a bullish stance on stocks, argues Jonathan Krinsky at MKM Partners, citing the S&P scoring its first 52-week high in over a year. The S&P 500 Total Return Index SPXT, +0.34% already stands at an all-time peak, notes Josh Brown at The Reformed Broker.

But it’s not all tears of joy.

The stock market is range-bound until it actually closes above the levels that have tripped it up before, writes Adam Sarhan at Sarhan Capital. Wait for a couple of strong weeks, argues BTIG’s Katie Stockton.
“A decisive breakout would require consecutive weekly closes above 2,135, in our opinion, and until then we would remain cautious,” she writes.

Time — and earnings season — ought to help resolve the debate between the bulls and bears. Second-quarter reports start later today with Alcoa’s release.

And here is 3 reasons why you shouldn’t buy S&P:

1. Rally on jobs report was overdone: The S&P is “testing its all-time high in the midst of global economic uncertainty, sub 2% U.S. GDP growth, declining earnings, a strengthening dollar and a potential global banking crisis,” O’Rourke writes. “The rally was based upon an economic data point that is dated, incomplete and will be revised.”

2. “This is not 2013-2014, when earnings were rising and the data was strengthening.” Instead, we’ve got a U.S. economy that appears to be slowing while the world economy’s risk level is rising, he argues. But “blind buyers continue to follow the playbook of 2-3 years ago.”

3. Other asset classes aren’t so encouraging: “The last place investors should look to identify the veracity of fundamental developments is the S&P 500,” O’Rourke argues. He instead points to other more troubled assets, such as the Brexit-hit euro EURUSD, -0.0271% and the Euro Stoxx 50 SX5E, +1.67% , as well as China’s yuan and oil CLQ6, -0.11% . He highlights the rising haven demand for gold GLD, +0.04% , Treasurys and the dollar DXY, +0.00% .

“The only key asset that does not fit the profile of global uncertainty is the S&P 500,” he writes.