- Bears continue to make toppish calls as the S&P 500 prints fresh highs.
- Peter Brandt sees the SPX climbing above 3,500 after a technical breakout.
- Fundamental factors such as the “not QE” and money market balances support Brandt’s bullish take.
Successful investors know that the trend is your friend. If a market is trending up, it would be wise to ride the bullish wave. Otherwise, you are positioning yourself for slaughter.
Getting slaughtered is an experience that many S&P 500 bears know all too well. They continue to post toppish charts and proclaim that the end of the decade long expansion is over. As we all know, the SPX continues to rip higher and post fresh all-time highs.
Eventually, the bears will get it right but it seems like it won’t be anytime soon. The S&P 500 is still in a strong uptrend and it is likely to continue until the end of 2020.
Fundamentals Support Peter Brandt’s Bullish Take on the S&P 500
Peter Brandt took to Twitter to share his bullish stance on the S&P 500. The widely-followed trader claims that the index has a substantial upside as it can climb as high as 3,524. The analyst’s prediction comes after the SPX broke out from an inverse head-and-shoulders pattern.
The bullish price action is not the only catalyst that can send the market higher. With the current macro environment, the stock market is likely to push higher due to the Federal Reserve’s intervention. Ever since the “not QE” QE4 started, the S&P 500 has been on a tear. It appears that the Fed is giving the bulls ammunition to drive the SPX to greater heights.
The bullish tone set by QE4 is driving market sentiment from fear to extreme greed. Investors are beginning to realize that the party is still going strong.
Trillions of Cash on the Sidelines Waiting to Be Deployed
The shift in the sentiment is crucial because QE4 might not be enough to send the index to Brandt’s target. The SPX would need the help of big time investors to sustain the ascent. Fortunately, investors have put away $3.41 trillion in cash. Interestingly, this amount is identical to the money market balance way back in March 2009 when the stock market bottomed out.
According to The Wall Street Journal, the growth in the money market balance was fueled by a number of factors, which include the health of the ten-year economic expansion and an aging uptrend. The shift in sentiment from fear to greed should ease the concerns of investors and convince them they are missing out on gains.
Mati Greenspan, an investor and analyst, believes that the SPX can actually climb as high as 3,500 by the end of 2020. The analyst told CCN,
The S&P 500 is up 24% this year, which is a phenomenal return. 3,500 is certainly a possibility over the next year as it represents a gain of about 12% from current levels.
Nevertheless, Greenspan cautioned investors due to global factors. He said,
It would be quite a stretch though given the recent growth and current geopolitical and anti-globalization headwinds.
Overall, there are factors suggesting that Brandt’s 3,524 target is plausible. Bears may get their toppish call right eventually, but it seems unlikely to be in the next year or so.
Disclaimer: The above should not be considered trading advice from CCN.
This article was edited by Sam Bourgi.
Last modified: November 20, 2019 14:16 UTC