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The S&P 500 is on track to hit the 5,000 level by 2024 based on past secular bull markets, according to Bank of America.
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The bank compared the current bull market that began in 2013 to the secular bull markets of the 1950s and 1980s.
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The presidential cycle should serve as a tailwind for equities through mid-2024, BofA said.
The S&P 500 is on track to hit the 5,000 level by next year as the secular bull market that began in 2013 follows a similar roadmap to that seen in the 1950s and 1980s, according to Bank of America.
Such a rally would represent upside potential of at least 13% for the S&P 500, which was trading around 4,400 on Thursday.
“The 24% rally in the S&P 500 from the October 2022 low connects the secular bull market of 2013 to today with the secular bull markets of 1950 to 1966 and 1980 to 2000,” the technical analyst said. of BofA, Stephen Suttmeier, in a Thursday note.
In an overlay chart, he compared the bull markets that started in 1950 and 1980 with the current market and found that they are “lining up” after the strong rally of recent months.
The chart shows that the last S&P 500 bull market would last at least until 2028 and eventually break above the 6,000 level at some point in 2026, assuming it continues to track previous bull markets as closely as it does. has done so for the past decade.
A tailwind that could propel the stock market to 5,000 by next year is the presidential cycle, which highlights the relationship between stock market performance and a US president’s four-year term.
“The S&P 500 can continue its winning path in [the] second half after putting up a strong first half. When the S&P 500 has an above-average first half return in Year 3 of the presidential cycle, the second half tends to be stronger than the typical second half with an average second half return of 3.9 %,” Suttmeier said.
While the third year of a president’s term is typically the strongest for the stock market, the fourth year has also historically seen strong performance in the run-up to an election.
“The presidential cycle shows an upward trend from the midterm low through the end of the presidential election year,” Suttmeier said.
Finally, he pointed out that monthly price momentum in the stock market is about to issue its first buy signal since July 2020. This signal has been accurate during previous inflection points in the ongoing bull market.
“A bullish cross of the MACD line above the signal line this month would complement this signal and offer more confirmation of the S&P 500 rally from the October 2022 low. The latest July 2020 signals, July /September 2019, September/November 2016, February 2012, August 2009, May 2003 and December 1998 acted as bullish continuation signals for US stocks,” Suttmeier said.
A lot is working for US equities right now, and if its secular bull market roadmap materializes, the 5,000 level on the S&P 500 could be reached sooner than expected.
Read the original article on Business Insider