- The S&P 500 should see another double-digit gain to end the year, Frank Cappelleri said.
- The CappThesis founder sees the index reaching 6,100, as long as it remains above a key bullish threshold.
The stock market is still poised for another year of double-digit gains, as long as the S&P 500 stays above a key threshold: 4,800.
So says Frank Cappelleri, a Wall Street veteran who founded the research firm CappThesis. Cappelleri believes the S&P 500 is still on track to hit 6,100 in 2024. That implies a 28% rise for the year and a 16% rise from its current levels, as long as the benchmark remains above the technical threshold of 4,800.
The S&P 500 has climbed more than 27% since its October 2022 low, officially crossing the threshold into a bull market. Cappelleri told CNBC last week that since then, the S&P 500 has climbed steadily, reached higher levels and experienced a “clean breakout” through five technical thresholds – three signs that constitute a bullish trend in the market .
He said “the 6,100 level was based on the break of 4,800, which was really just a very big uptrend,” adding: “The good thing right now is that the market is not hasn’t gone back much yet, of course. And so it has the ability to pull back, let’s say, 7 to 8% while still keeping that breakout target intact. »
-The bullish surge has not been lost on investors, who have become more exuberant about stocks in recent months as they anticipated Federal Reserve rate cuts and prepared for the possibility of a soft landing of the American economy.
The CME FedWatch tool says traders rate a 66% chance the Fed could cut rates by 75 basis points or more by the end of the year. Meanwhile, in the American Association of Individual Investors’ latest investor sentiment survey, 50% of investors said they felt optimistic about stocks over the next six months.
“This tells us that, of course, investors want to continue buying during the decline,” Cappelleri added.
Some forecasters, however, warned of storm clouds hovering over the market given the risks to the economy. By some valuation measures, stocks reflect the bubbles of 2000 and 1929. Meanwhile, there is still a decent chance of a recession over the next year, with economists at the New York Fed estimating that the U.S. have a 58% chance of entering a recession by February 2025.
