{"id":24261,"date":"2025-06-12T07:30:00","date_gmt":"2025-06-12T11:30:00","guid":{"rendered":"https:\/\/jeffclarktrader.com\/market-minute\/?p=24261"},"modified":"2025-08-22T09:05:52","modified_gmt":"2025-08-22T13:05:52","slug":"stocks-are-balancing-on-a-knifes-edge","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/stocks-are-balancing-on-a-knifes-edge\/","title":{"rendered":"Stocks Are Balancing on a Knife’s Edge"},"content":{"rendered":"
\n

Managing Editor\u2019s Note: <\/strong>Today, we\u2019re hearing from our contributing editor Mike Burnick in his weekly Thursday feature.<\/p>\n

Mike has over 30 years in the investment and financial services industry \u2013 from operating as a stockbroker, trader, and research analyst, to running a mutual fund as a registered investment advisor and portfolio manager, to being Research Director for the Sovereign Society, specializing in global ETF and options investing.<\/p>\n

And he\u2019s been senior analyst at TradeSmith for three years, running Constant Cash Flow, Infinite Income Loop, <\/em>and Inside TradeSmith<\/em>.\u00a0\u00a0<\/p>\n

Here\u2019s Mike\u2026<\/p>\n<\/div>\n

Stocks Are Balancing on a Knife’s Edge<\/h2>\n

BY MIKE BURNICK, CONTRIBUTING EDITOR, MARKET MINUTE<\/em><\/strong><\/p>\n

The S&P 500 index is closing in on its all-time high of 6147 set prior to tariff trauma in February.<\/p>\n

But beside higher tariffs still being a potential stumbling block to higher stock prices, high valuations are another drag that could hold back market gains.<\/p>\n

Coming into this year, stocks were already richly priced with the S&P 500 trading at a forward price-earnings (P\/E) ratio of 22x, compared to an average P\/E ratio of about 16x for the index over the past 40 years.<\/p>\n

That\u2019s most likely the reason why the tariff-induced selloff in stocks was so severe. There was little or no margin for error with valuations stretched to the upside.<\/p>\n\n\n

\"\"<\/figure>\n\n\n

Fast forward to now, and the S&P 500 forward P\/E ratio at 21.7x has bounced back to almost where it was pre-tariffs, as you can see above (red line).<\/p>\n

But the problem is, growth estimates for S&P 500 earnings have not<\/u><\/em> bounced back along with the sky-high P\/E ratio. And that makes market valuation a problem again.<\/p>\n

In fact, Wall Street analysts have been steadily cutting their S&P 500 profit estimates for both the rest of this year and for 2026.<\/p>\n\n\n

\"\"<\/figure>\n\n\n

While first-quarter results are strong with earnings 6% above expectations, that was before tariff costs really kicked in for companies. Wall Street has been sharply cutting their S&P 500 earnings-per-share estimates for Q2 through Q4 (see chart above), as well as for 2026.<\/p>\n

Mike Burnick\u2019s Bottom Line:<\/em><\/strong> So far, profit estimates have only been cut by about 3 to 4%, which doesn\u2019t sound like much. But with market valuations just about priced for perfection today, anything less than perfect profit results could quickly spoil the party for stocks.<\/p>\n

Good investing,<\/p>\n

\"Signature\"<\/p>\n

Mike Burnick
Contributing Editor, Market Minute<\/em><\/p>\n

P.S.<\/strong> While less-than-perfect results are sure to send markets spiraling\u2026 Jeff Clark is waiting in the wings to take advantage of the incredible money-making opportunities that volatile, panicky, crashing markets offer.<\/p>\n

Because those conditions are great time to make money.<\/strong> Just ask Jeff \u2013 trading them is how he has made most of his wealth\u2026<\/p>\n

By trading the 2008 financial crisis\u2026 trading the 2020 covid crash\u2026 trading crypto market panics\u2026 trading the 2000 and 2022 tech wrecks\u2026 trading the April tariff flash crash\u2026<\/p>\n

These were all big opportunities that Jeff and his subscribers capitalized on.<\/p>\n

Because in his world, bad news is good news. <\/em><\/strong>You can access his chaos strategy right here<\/a> to find out how you can make truly lifechanging wealth in the most difficult market conditions for most investors.<\/p>","protected":false},"excerpt":{"rendered":"

Managing Editor\u2019s Note: Today, we\u2019re hearing from our contributing editor Mike Burnick in his weekly Thursday feature. Mike has over 30 years in the investment and financial services industry \u2013 from operating as a stockbroker, trader, and research analyst, to running a mutual fund as a registered investment advisor and portfolio manager, to being Research<\/p>\n","protected":false},"author":100,"featured_media":0,"comment_status":"closed","ping_status":"0","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-24261","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/24261","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/100"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=24261"}],"version-history":[{"count":4,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/24261\/revisions"}],"predecessor-version":[{"id":25103,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/24261\/revisions\/25103"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=24261"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=24261"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=24261"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=24261"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=24261"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=24261"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=24261"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}