From last Tuesday, U.S. stocks have jumped about 10 percent. This rally, however, may be as fragile as late baseball great Mickey Mantle, according to Keith McCullough of Hedgeye Risk Management.
On Friday, the S&P 500 Index rallied 20.92 points, or 1.74 percent, to end at 1,224.58. Last Monday, it closed at 1,099.
The Dow Jones Industrial Average rose 166.36 points, or 1.45 percent, to close at 11,644.49 for the day. The Nasdaq Composite rose 1.82 percent.
The market has risen mostly on positive news out of Europe, especially the promise from France and Germany to unveil a plan by month’s end to recapitalize European banks and help debt-laden Greece.
However, McCullough thinks the market is like baseball legend Mickey Mantle, whose athletic prowess and skills were eventually marred by damages from injuries and alcohol abuse.
“People want the American stock market to be something that it was,” he told CNBC TV.
The U.S. and global economy have been damaged significantly in recent years, leaving the market “begging for bailouts” and “begging for cheap money, he said.
Such a state of relying on policymakers instead of sound economic fundamentals is fragile, according to McCullough.
He expects the market to go “a lot lower” on “European disappointment” as “the U.S. system is fragile enough on its own.”