Lance Roberts | Aug 25, 2021 03:28PM ET
Markets opened mixed this morning as investors await the Fed’s Jackson Hole Conference. Markets may be lifeless today and tomorrow as they await Powell’s speech on Friday and importantly his stance on tapering QE. Some investors have mentioned the Fed might delay tapering due to the Delta variant. While a possibility, there is potentially some good news on that horizon. Florida and other hard-hit states are starting to see the number of cases decline, or at least stabilize.h3 S&P 5000/h3
In the rush to be the first person to put a S&P 5000 target price out, analysts are pushing 2022 price targets markedly higher despite slowing economic growth rates and high valuations.
h2 What To Watch Today/h2“Wells Fargo’s Chris Harvey raised his year-end S&P 500 price target to 4,825 from 3,850, as reported by Bloomberg’s Lu Wang . This move follows a weekend note by David Lefkowitz, head of equities for the Americas at UBS Wealth Management, who raised his year-end price target for the S&P 500 to 4,600 from 4,500.
"Lefkowitz also raised his June 2022 price target to 4,800 from 4,650, with the real headline coming from his year-end 2022 S&P 500 price target—5,000.
‘Yes, the rally off the COVID-19 bottom in March 2020 has been extraordinary, but we think there are further gains ahead,’ Lefkowitz writes. ‘Solid economic and corporate profit growth, in conjunction with a still-accommodative Fed, means that the environment for stocks remains favorable. As a result of our higher EPS estimates, we raise our targets for the S&P 500 for December 2021 by 100 points to 4,600 and June 2022 by 150 points to 4,800. We initiate our December 2022 target of 5,000, representing about 13% price appreciation from current levels.’
"With this 2022 outlook, Lefkowitz also garnered headlines earlier this month in raising their year-end price target to 4,700 from 4,300 while putting a year-end 2022 price target on the benchmark index of 4,900.
"Like Golub, Lefkowitz sees earnings growth — not multiple expansion — as the driving force behind the market’s rally in the year ahead.
"‘Our price targets assume a forward P/E multiple of about 20x, slightly below current levels of 21x,” Lefkowitz adds. “We expect valuations to remain above historical averages mostly due to the very low interest rate environment. Said another way, stocks continue to look appealing relative to bonds.'” – Yahoo
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While the market has indeed rallied over the last few days, as investors bought the 40-dma “dip,” volumes have declined sharply along with money flows. As we have witnessed over the last several months, these “buy the dip” run from the moving average to the top of the 2-standard deviation Bollinger® Bands before correcting. If you haven’t bought the exact bottom of the dips, the gains have remained quite muted.
As noted, there is a large divergence between “price” and the “advance-decline volume,” with the “advance-decline line” breaking below its 50-dma.
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