Dow Jones Industrial Average (DJIA) futures jumped 100 points higher in early trading Monday, extending last week’s monster stock market rally. After months of “recession fears,” analysts are now turning bullish with some hailing “the start of a new bull market.”
Ever the stock market optimist, Fundstrat’s Tom Lee said investors will likely see more gains before the end of the year.
“The next 8 weeks will be like fireworks. We could easily [see the S&P 500] above 3200 before the end of the year.”
Tom Lee has been one of the few bullish voices through this year’s tumultuous trading season. Lee urged investors to “buy the dip” back in August when trade war fears sent the Dow and S&P 500 down.
“We see a falling 10-yr and weakening USD and higher odds of a September cut as VERY BULLISH—hence, we strongly urge investors to take advantage of this weakness.”
If the S&P 500 enjoys a Santa Clause rally and hits 3,200 before the end of the year, per Lee’s prediction, that implies a 4% rally going into the year-end.
Speaking on the same CNBC panel, Rob Sechan of UBS Wealth Management was more neutral on the US economy. But he agreed that fresh highs were the ‘high-probability outcome’ after a string of solid fundamentals.
“You needed better than feared reports on earnings. Got ‘em. You needed better than feared on manufacturing. You got ‘em. You needed good jobs numbers and you needed incremental progress on trade and the fact is that cascaded really well for markets and that’s where we are today [record highs].”
Sechan did, however, strike a cautious tone based on larger macro headwinds such as the ongoing trade war and looming 2020 presidential election.
Going one step further, Callum Thomas of Topdown Charts believes the US stock market has entered a “new bull market.”
“Something very interesting is happening right now in global equities, and most people have probably missed it. A set of unique indicators have put in some rare signals that are usually only seen at the start of a bull market.”
He points to the rising number of countries with stock markets hitting fresh 52-week highs. According to Thomas it’s a strong indicator of how many countries are in the midst of a bull market.
“It’s a classic bull market commencement signal, and we saw this at the start of the last 3 cyclical bull markets (2009-11, 2012-15, 2016-18).”
This article was edited by Samburaj Das.
Last modified: November 4, 2019 11:45 UTC