S&P 500 Crossed 2,860, How Long Can People Stay Bearish?

 | Apr 02, 2019 01:25AM ET

The S&P 500 is now about 2% from its all-time high, and I think at this point we should enjoy our achievements. Not many were calling for this 23% rally, and it feels so good to have been proven correct, despite all the criticism taken along the way.h3 Recession?/h3

Recession fears, earnings worries. What happened? The S&P 500 has crossed 2,860, and there is not much standing in the way of an all-time high. How much longer can people stay bearish? They have only missed a nearly 23% rally since December 24.

Let’s say the latest PMI numbers continue to suggest anything but a recession is on the way, something I have said over and over, and over again. The March reading for Manufacturing came in at 55.3 versus estimates of 54.2, and up from 54.2 last month. Also, the latest GDPNow forecasts are calling for 1Q growth of 2.1%. I’m no rocket scientist, but these numbers do not scream of a recession. Where did these overblown worries come from? Talk about being wrong, twice!

Could we suddenly slip into recession, who knows, I guess anything is possible? I will tell you what though, if the first quarter is the worst quarter of this cycle, as the earnings estimate we have tracked project, and we print a 2% GDP for the first quarter, then stocks have much more room to rise. It will likely signal that GDP growth for the rest of the year will be far better than anybody expected.

h3 S&P 500 (SPY)/h3

The S&P 500 is trading around 2,866, and between here and 2,870 there may be some mild resistance. But after that, we are talking about a return to near an all-time level high of around 2,915.