The continued rise to record highs in the US stock market should not scare investors worried about an impending crash, according to LPL strategists. S&P 500 record stacks looming up nearly 5% through the end of the year. The average target of the trading desks for the S&P 500 is 4,328 points.
On Wednesday, the S&P 500 closed at an all-time high for the 51st time this year, but it is still below the record of 77 closing highs of 1995 .
“Unbelievably, 2021 is currently on track to hit 78 new highs . There is a long way to go, but this has been an incredible year and this is another way to show it,” he says in a note echoed by Business Insider, LPL Chief Market Strategist Ryan Detrick.
Detrick has analyzed the historical data and concludes that, overall, stocks ended the year strong when the S&P 500 posted more than 30 all-time highs at the close from the beginning of the year through August. According to specific, equities a positive performance from August to the end of the year in 88% of the episodes reviewed.
On average, stocks rose 4.7% in the last months of the year , while the average return for the last month was 5.2%. This figure is well above the average profitability in the last month, which is 3.6% in any year.
At the moment, the average goal of the main trading desks for the S&P 500 at the end of the year is 4,328 points. The median raises this goal to 4,400 points. The most optimistic strategists today are John Stoltzfus (Oppenheimer) and David Kostin (Goldman Sachs) , who see the indicator reached 4,700 at the end of 2021. For its part, Savita Subramanian (Bank of America Merrill Lynch) is running among the more negative with a goal for the end of the year at 3,800 points.
Opportunity to buy
“The year 2021 has started strong and we continue to wait for prices to rise before all is said and done. We would seize any potential weakness as an opportunity to buy,” concluded Detrick.
The S&P 500 remains one step away from reaching new highs, despite having faltered during the trading session on Thursday. Although much of its gain since spring 2020 has reflected earnings growth, its valuation has also risen sharply and, in cyclically-adjusted terms, is almost as high now as it was at the height of the tech bubble.