This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Randy Frederick, VP of derivatives and trading at Schwab.
Frederick previously saw little-to-no resistance to the S&P 500 (SP500) returning to its previous high of 3,580, but things are moving quickly. Thanks to last week's big rally (which continued on Monday), the index has already moved back to within a stone's throw of that level.
Maybe most interesting about Frederick's expectation of higher share prices is that it comes alongside his anticipation of rising volatility - the two don't typically go hand-in-hand. Why now? The upcoming election is to be thanked for the volatility, and the still-massive monetary and fiscal stimulus is helping the rally in stocks.
Earnings season - which somewhat officially begins this morning - may provide another catalyst for higher stocks. Frederick reminds that earnings were expected to fall 44% Y/Y in Q2, and they ended up sliding only 7%. For Q3, earnings are seen dropping a full 22% from year-ago levels. This suggests there's plenty of room for results to surprise to the upside. One caveat: Earnings expectations actually ratcheted higher into the end of the quarter - an unusual occurrence that's worth paying attention to.
There's plenty more, including why Frederick is a fan of the underperforming financials, why he expects the big tech names to skirt antitrust issues, and why the best time to invest is always "now."
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