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There are three reasons why the stock market will reach record highs by the end of 2023.
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One reason is the fact that market breadth has improved in recent weeks, according to Ryan Dietrick of Carson Group.
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“The S&P 500’s advanced decline line just closed at a new all-time high last week, which is another bullish sign,” Detrick said.
even after Standard & Poor’s 500 It rose 14% in the first six months of the year, and there could be more gains to come, according to Carson Group senior market analyst Ryan Dietrick.
Dietrick said Note on Tuesday That the stock market may finally rise to a record high before the end of the year for three main reasons.
This bullish view contradicts many strategists who described the recent rally in stocks as nothing more than a bear market rallyresonates Detrick’s consistently bullish commentary on the stock Since the S&P 500 found its bottom in mid-October.
Detailed below, the three reasons why Dietrick believes the stock market can continue to surprise upside and reach new highs by the end of the year.
1. Record heights are not far away.
The S&P 500 traded above 4,400 last week, which puts the index within a few hundred points of its January 2022 record high of 4,818. At the index’s current price level of 4,373, the S&P 500 would have to rise about 10% to hit a record high. new.
“The bottom line is we continue to be very heavy in stocks and underweight bonds, with new highs this year not too far for stocks,” Detrick said. “With more good news, stocks could add the 8% needed to return to new highs.”
There is precedent for the stock market’s strength to continue through the end of the year after a strong start in the first six months of the year.
“A good start to a year usually means a good second half,” Dietrick said.
Detrick looked at the 22 times since 1950 that the S&P 500 rose at least 10% at the end of June. The last six months of the year generated an average gain of 10% and shares were up 82% of the time.
2. Market breadth is improving.
While big tech stocks have driven much of the S&P 500’s gains so far this year, that is beginning to change with the increase of More individual stocks start to rally.
this A bullish inside sign for the stock market It indicates an improvement in the sustainability of the continuous rise. The latest clue is the fact that the S&P 500’s advanced slope line broke to a record low last week.
the The advanced regression line is a technical indicator It helps measure the number of individual stocks that are participating in the market trend. The recent breach indicates that the breadth or share among individual stocks is beginning to recover.
“The S&P 500 Advance-Decline just closed at a new all-time high last week, another bullish sign that the uptrend is indeed higher,” Detrick said.
Usually during major stock market peaks, stock prices move up while the market breadth moves down. This time, stock prices and market breadth are moving higher, giving Dietrick confidence that the stock market rally cannot continue.
“We expect the price to eventually reach new highs along with breadth, just as it has done so many times throughout history, and there is a good chance it will this year,” Detrick said.
3. Stocks will not go down.
Even after the stock market sell-off this year, stocks have more often than not seen a rally the next day.
“They just didn’t want to go down,” Dietrick said.
Detrick found that shares rose by an average of 0.27% after a down day, one of the strongest returns for the S&P 500 index dating back to 1928.
“I would take this as another reason to stay hopeful in 2023,” Detrick said.
Read the original article at Business interested