Last week, the S & P 500 reached 66NS Those who started this year with a bearish outlook, which is the highest record of the year, can probably wait until the end of the year. An annual Wall Street strategist survey from December 2020 predicted that stock prices would rise by 9% by the end of 2021. The highest goal for the S & P500 was 4800 and the lowest goal was 3950. The closing price of 4682 on Monday’s S & P 500 was 5.6% above the average target of 4433, an increase of 24.9% year-on-year.
While the strategists’ views on inflation, monetary policy and COVID-19 are correct on many topics, stock prices are still rising. Analysts may think they will be more bullish in 2022, but they aren’t. Most people expected a slowdown in the economy and earnings for a significant part of 2021, but that hasn’t happened yet and is impacting the 2022 target.
According to a year-end survey of Bloomberg economists, the average growth rate from current levels is only 3.0%, which is “the least optimistic outlook for 2019 with 20-year data.” In 2019, the S & P 500 rose 28.9%.
So what are their concerns?
Bank of America strategist Savita Subramanian said, “1 percent point. [increase] At the discount rate, we may send the S & P 500 to a tail spin that raises it to 3,600 inches. In addition to rising interest rates, there are concerns about US economic growth and, by extension, lower corporate profits. Some expect the S & P 500’s earnings growth to drop to 8%.
The daily chart of the 10-year T-Note yield shows that the yield rose sharply on Tuesday, ending at 1.625%. Testing resistance at 1.687% (line a) seems more likely, and breakouts will surprise the market.
On November 9, yields ended in one day below support (line b) and then rose. The daily moving average convergence-divergence (MACD) line and MACD-histogram have returned slightly positive, and the weekly indicators also support higher yields.
Morgan Stanley has one of the more negative outlooks for 2022, saying that “the base case target of 4,400 suggests a possible downside of 5%.” Interestingly, their chief US equity strategist, Michael Wilson, expects S & P 500 to be strong in earnings, but wants better growth in Europe and Japan.
The STOXX Europe 600 tracks the returns of 600’s largest stock exchange listed companies in 17 European countries, including the United Kingdom. It has risen 8.9% since its lows on November 9th as of last Friday’s closing price. It also formed the same thing, so weekly closing prices below 485 could signal a correction. Weekly MACD lines and MACD-histograms are rarely positive, but can return negative with two consecutive low weekly closes.
The weekly chart of the Nikkei 223 index in Japan does not seem to be as vulnerable as the STOXX 600 in the short term. The index is in the trading range (rows a and b) throughout 2021. Plan to move to the 35,000-36,000 area. Nikkei’s weekly MACD line is slightly positive and is about to bottom out.
Returning to the 2022 forecast, not all strategists are negative. The Goldman Sachs Group (GS) year-end target is 5100. Demand for US equities from both businesses and individuals is expected to remain at a high level of corporate repurchase, totaling $ 550 billion.
Brian Belsky, BMO’s chief investment strategist and publisher of the most bullish estimates for 2021, believes that concerns from other analysts will boost the market in 2022, but in 2021 Not so much, the year-end target is 5,300.
Of course, the biggest problem with these predictions is the fixed end date. It’s not just whether the market will reach these levels in 2022, but whether it will end the year. If the S & P 500 reaches 5,300 in June 2022 and then falls to 4,600 by December, most people will not reward Brian Bellsky’s exact upward target.
We should be able to get predictions from all the major strategists by mid-next month, so stay tuned for continued analysis over the next year. In the coming weeks, we should have more data to add to the growth and value discussion.