Where’s the Stock Market Headed…..Update

Well, if any of you read my last take on the market, you might have recognized that the S&P already crossed my year-end target of 1,700, most recently closing at ~1,707. Sooooo, what now? Well, I still stick to my forecast that it will be a bumpy ride through the end of the year, but am raising my price target to 1,775 by end of year 2013, with the S&P still at 2,000 by the end of 2014.

The skeptics are coming out in droves as of late, with stable earnings beats, but slightly lower revenue beats. This just means that companies’ sales aren’t growing as quickly as analysts think, but are keeping costs under control.

So what are the negatives I see in the market:

– Small caps are leading (typically the sign the end of a rally is near)

– +20% gain in the market over the first seven months (also, signalling one last strong push usually seen at end of rallies)

– Fund managers are very heavily weighted in equities (bearish contrarian indicator)

– SPX EPS growth of just 1.7% for 2013, and -3.4% ex-financials. With overall fundamentals and valuation being rather negative

This would typically be a “run for the hills situation”, but this point in time in our economy isn’t like many others we’ve ever been through. And being in rather “unfamiliar” territory, you can usually throw out some of the correlations/causations we’ve seen in the market in the past.

The only story that is positive for the SPX, {besides GDP growing at 2% (sluggish, but growth is growth!!)}, and is a complete wild-card, is Europe. Albeit things are still bleak, but are showing signs of life.

So the negative  pundits are out there (some saying S&P 1,385 by the end of the year!!), but I’d expect some pullback and volatility, with the S&P rallying the last few months of the year to 1,775.

Let me know what you think!



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