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The stock market rally is expected to continue through 2025, according to Ari Wald of Oppenheimer.
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In a note, Wald highlighted the strong market breadth and healthy indicators across sectors.
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Key sectors such as industrials, financial services and technology appear to be resilient, Wald added.
Stock markets are expected to continue hitting record highs, with few signs suggesting that stock prices are nearing a peak.
That’s according to Oppenheimer managing director and technical analyst Ari Wald, who said in a note over the weekend that there are bullish “turning points” in the underlying market.
“We continue to balance the seasonal headwinds with our view that the evidence for a major peak is not convincing,” Wald said.
Wald said he was encouraged by the fact that the number of shares on the New York Stock Exchange above their 200-day moving average has surpassed 60%, a healthy sign that the market is moving forward and shows that it’s not just a handful of large-cap tech companies that are driving the gains.
“We maintain that market breadth remains constructive, and that defensive leadership may represent ‘compensation’ for previous weak performance,” Wald said.
Based on the chart, traders could buy last week’s breakout to new cycle highs, Wald said. Standard & Poor’s 500With stop loss set at 5,650 at close.
A stop loss is a risk management tool used by traders to automatically sell securities when a certain price is reached.
For the S&P 500, 5,650 represents only a 1% downside potential, while Wald’s 6,000 upside price target in the first half of 2025 represents a 5% upside potential.
Wald’s price target for the S&P 500 of 6,000 is based on an average bull market cycle.
“The S&P 500 rose 64% over the 23 months between October 2022 and September 2024. Since 1932, the average bull cycle has gained 73% over a 32-month period,” Wald said.
Meanwhile, the average bull market cycle gain was 102% over a 34-month period.
If the current bull market follows the path of the average bull market, stocks could continue to rise until the end of 2025 with the S&P 500 rising to around the 7,000 level.
This 7000 target is in line with Evercore ISI Bullish Forecast, Which said in June that the AI craze could drive stocks higher in 2025.
Wald said he was encouraged by the broad market environment due to the “right” leadership that has seen stocks reach new highs, including in the industrials sector.
“We view the cycle high for industrial stocks as confirmation of the health of the bull market,” Wall said.
Wald said record highs in the financial sector are another positive sign for the broader stock market, while the technology sector may be poised for its next big move higher.
“The technology sector is on track to hit an all-time high on both an absolute and relative basis in July,” Wald said. “While the relative trend in the sector has slowed, we still believe that the technology sector represents one of the strongest long-term structures in the market.”
Finally, Wald highlighted the healthcare sector as another area of the market that is showing resilience, even as it lags behind other sectors.
While the healthcare sector is on track to hit new all-time highs, it is relatively flat to new multi-year lows compared to the S&P 500.
“We believe the difference between the absolute and relative trend in healthcare indicates a broad market – even the lagging sectors are seeing gains,” Wald said.
According to the note, similar scenarios are evident in the communications services and materials sectors.
Read the original article on Business Insider