A bull case for 3500 in S&P plus weekly review

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Not bad for 74 days, eh?

the source for this article is delta market investment newsletter Screen Shot 2019-04-13 at 11.10.57 AM

Delta continue : “For the market to return to its previous high, it will advance about 1.7% from current levels.  This is hardly a compelling upside story.  Is there a case to be made for the S&P 500 index to run materially higher than 2,940 in the next year?  The bullish price action of the stock market year-to-date suggests there is upside to consensus earnings and growth estimates.

One simple, time-tested rule of investing is the Rule of 20.  The Rule of 20 says the S&P 500 Price/Earnings (P/E) multiple equals 20 minus inflation.  The Federal Reserve currently measures inflation at 1.4%.  20 less 1.4 equals 18.6.  If we apply the 18.6 P/E multiple derived from the Rule of 20 to the consensus S&P 500 2020 earnings forecast of $187.42, we arrive at a price target of roughly 3,500 on the S&P 500 about one year from now.  That is 21% upside from current levels.”

IBD says this : “Leadership in the stock market is still centered on software, electronics, computer and chip sectors. They are showing no signs of weakness.”

Fidelity Weekly Ending Friday April 12th 2019barchart weekly Ending Friday April 12th

even for this week, except for health care and energy sector, all other sectors ended the week at the top of the trading range

Happy trading !

 

weekly stock market review as of Week ending Friday March 15th 2019

barchart sectors 5 days performance as of Closing Friday March 15th 2019Screen Shot 2019-03-18 at 12.54.55 PMfidelity end of 5 days as of Friday March 15th 2019

the top 5 sectors closed at the week’s highs. IWM – Russell 2000 ETF after last weeks red candle and down week has been picking up and again this week might test the 50 days Simple moving average (SMA).

according to IBD “The Nasdaq sprinted 0.8%, leading the market largely on strength in semiconductor stocks. The S&P 500 and Dow Jones Industrial Average each added 0.5%. The small-cap Russell 2000 rose nearly 0.3%. Volume rose sharply due to the simultaneous expiration of options and futures.”

IBD continues “During the week, leadership was broadly based. A dozen and a half groups scored weekly gains of 5% or better, according to preliminary data. They included medical stocks, retail, tobacco, semiconductors, computers, oil and transportation ships.

Note the variety: This is not a narrowly based uptrend, and that’s good news. Bulls prefer diversified leadership because it protects the indexes against one-off outcomes.

The S&P 500 index and Nasdaq composite recouped the prior week’s losses and hit their best levels of the current stock market rally, climbing 2.9% and 3.8%, respectively, for the week.”

Overall the market is in good health. Small caps are rising, and most importantly growth stocks are behaving extremely well.

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happy trading!!