This week as earnings have flowed in there have been over 3/1 broker downgrades, many on valuation. The TV and Print pumpers are telling the Public to be bullish, while their brokerages are acting as if they believe the market is way overbought. The Public is usually played as suckers by the market wiseguys, and I believe this time will be no exception. Meanwhile, Big Pharma will continue to benefit from the aging Boomer population. The likelihood of big Democrat victories has cast a pall over the sector, but the fear of what might happen is overblown IMO. I believe the Dems will have a lot more bark than bite when it comes to this sector, and the political negatives will be outweighed by the rapidly increasing need for the products this industry provides. JMHO. We'll see.
Obviously, I have been early on my market timing in forecasting the market peak. I still believe it is near, though. One professional stock analyst stated over the weekend that he sees the earnings to be reported starting to turn sour in the financial sector. There is a good reason to expect that, since banks typically borrow in the short term market, and lend at normally higher rates longer term. For a while now, the inverted yield curve has meant that the cost of borrowing in the short term market has been more expensive. This has cut into lenders' profits. Last week, we got a taste of that with the disappointing earnings from C. More of that from other banks could be the catalyst to derail the current rally. However, aside from the fundamentals, the S&P rallies for the last 5 years, except for the great rally off the Oct '02 lows, have been typically less than 150 points before a corrective phase has started. If you calculate the current rally's advance from the August low we have already moved over 140 points. It's greater if you calculate the advance from the July low. By that measure the correction is due. JMHO. We'll see.
There can be little question that the market is over bought. It has been for quite a while. It will come to an end one of two ways. There will either be some bad news that a market that is this vulnerable cannot tolerate, or there will be some good news that the market doesn't celebrate as it should and that will denote the top, just prior to the decline. But it's been a stubborn market if you are playing it on the short end.
I think you are misguided that the Dems will make more noise against big pharma than actually take action. Yours seems to be based more on hope than on reality. Of course, Bush can veto anything too hideous. But President Obama won't veto the same stuff. A Dem House, Dem Senate and President Obama or Hillary represent a 50% haircut for ABT share price. Besides the stent news, I think ABT is stagnant because of political risk. But I thought it would have been going down, so it's doing OK.