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Why a ‘fanatical run’ higher may be shaping up for stocks

China's economic growth reached a 6-year low

The bulls, after enduring a nasty August stretch, have high hopes coming into the week. Not only does the blogosphere feel a bit less gloomy than usual, the results from Barron’s latest Big Money poll paint a pretty clear picture that the pros are gushing over the potential for a sustained push.

Of course, that’s not necessarily a good thing. Ask any contrarian.

Whether this week, specifically, lives up to the positivity depends on a load of earnings, with a dozen blue chips on the docket. Other than that, updates from the real-estate front could steal the spotlight, if only momentarily. It’s doubtful any big surprises are in store as far as the data. Lowly interest rates and a healing job market are expected to have paved the way to higher housing prices.

Really, does it even matter if the housing numbers do disappoint? Despite some signs that the vibe could be changing, bad news still isn’t the equity-crippler that many believe it should be.

“The idea that an economy that performs so poorly that it keeps the Fed on the sidelines is good for stocks is one that can only be based on recent history, one that starts after the 2008 crisis,” said Alhambra Partners Joe Calhoun, in a blog post contemplating last week’s gains.

“At some point, bad news will be bad news for stocks again,” he added. “It is more than passing curious that while stocks took all that bad economic news as a reason to be bullish, other parts of the market were not as sanguine.” As in gold and Treasurys, to name a couple.

While Calhoun warns investors “are about to get swept overboard,” The Fly from the iBankCoin blog is fired up for a big move to the upside in the coming days.

“Everything is set for a fanatical run to the upside. Rates are low. Oil is firming. Biotech is bouncing. Shorts are feeling pressure to cover,” he said. “Being +15% for the year, I am merely looking for another 10% of upside, at which point I will then retire in the mountains of Romania, running amongst the goats and the rams — naked and feely without inhibitions.”

Our call of the day is on the same page (see below).

Key market gauges

The Fly might want to hold off on the goats and rams and stay clothed, because futures on the Dow YMZ5, -0.22% and the S&P ESZ5, -0.26% aren’t looking so good. Oil CLZ5, -1.97% and gold GCZ5, -0.62% are also in the red, which isn’t as surprising as it should be, considering the broader correlation we’ve seen lately. Asia ADOW, +0.10% closed mixed after a key report form China, and Europe SXXP, +0.31% was moving higher.

The economy

Housing steps into the spotlight this week, with September housing starts and existing home sales due in the coming days. First, however, is the October NAHB homebuilder survey, and that comes out at 10:00 a.m. Eastern. No big shift from last month is expected.

But before all that, China, which will likely be mentioned frequently in upcoming earnings calls, just posted its lowest economic growth rate in six years. Still, it was better than economists had predicted.

Earnings

It’s going to be a busy week in this arena, so we might as well get started early. Morgan Stanley’s MS, -5.30% third-quarter profit and revenue fell short of expectations, and Halliburton HAL, -0.97% posted better-than-expected adjusted earnings, but sales missed the mark. Toy maker Hasbro HAS, -7.23% reported growth in profit and sales that leapfrogged Wall Street’s estimates.

The buzz

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