Market is stretched and due for a correction, says Aadil Zaman

So far so good when it comes to earnings season. But in your mind how much of the markets rally year to date, how much of the potential for it to continue is weighing on earnings and earnings not only meeting expectations but beating I think Frank the the market as far as the earnings are concerned, I think the market is overstretched at this point in time. So anything less than a spectacular earnings report is going to be punished by the market. Last time we were on the show, we called for a year end rally which played out. We are thinking that at this point the market does look overstretched and is poised for a correction. You know, once every few years we do get a correction in the market and given the monster rally that we’ve had in equities since October of last year, I think a correction in the short term is definitely on the cards. All right. I appreciate you taking a victory lap on your call for that year and yet rally also right now important to note, all three of the major indices trading below their fifty day moving average. So right now you’re saying you believe the Magnificent 7 that will continue to be magnificent despite your call for a correction. I just want to ask you about this. I’m looking at Tesla down 30% year to date under pressure this morning. Apple seen a bit of a recent rally but flat over the last month and then NVIDIA, believe it or not, some people are going to get nervous right now, but NVIDIA actually down more than 2% over the last month. So the Magnificent 7, it doesn’t seem like there’s seven magnificent stocks anymore. Why are you so confident these stocks are still going to power the market? Well, you know, we think that longer term the market, the economy is looking good and we think that the Fed is going to be accommodative. So we feel that longer term, you know, the market’s going to go higher and the Magnificent 7 is going to be a key driver there because they’re going to be driven by artificial intelligence and cloud. And you know, you mentioned Tesla, you know, so Tesla is hammered, It’s down more than 60% from its high in 2021 and a lot of the negative news is probably factored into the stock price already. So from this point on, how can I jump in for a second? It’s it’s easy to say that AI is going to be a catalyst, but ever since we’ve seen rate cut, expectations change pretty dramatically. These stocks have also been under pressure. So as we see the rate cut outlook get pushed further out, Mary Daly, the latest voice you you don’t think that these stocks are going to remain under pressure. It seems like there there is some type of correlation. Yes, certainly. And I think that you know as the the market factors that end there could be some short term correction and what we think is that that will be an opportunity to jump in and add to these positions on the on the on the pullback, OK, jump in that’s a that’s a a theme of your notes that you gave us. So where is the place to jump in? You said magnificent 7 financials energies, that’s where you would jump in if there’s a pull back. I’m looking at financials down 2% since the bank earnings started, the IYF, the iShares ETF tracking the financial sector down a bit more. Is this the time to jump in or do you think you’re going to see a bigger decline and you jump in later? I think we have to look at it on a case by case basis. I think the market is poised for a correction over here. You know some of the some of the there are some opportunities that are emerging already but as the market falls further there’ll be more opportunities in the financials. We do like JP Morgan Chase over here because you know they reported their earnings, they disappointed on the net interest income, but their earnings overall were good. And fact of the matter is that when you do get rate cuts, the net interest income compresses, but revenues on other areas such as investment banking tend to go up like what we saw with Goldman Sachs. So a stock like that, we will be biased. Yeah, we will be biased of that. But in other areas we would wait and see for further decline because the market is hardly down right now.