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Stock market highs are expected to continue through 2025, according to Oppenheimer’s Ari Wald.
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In a note, Wald highlighted strong market breadth and healthy signals across several sectors.
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Key sectors such as industrials, financials and technology appear resilient, Wald said.
Stock markets are set to continue to hit record highs as few signs suggest share prices are close to peaking.
That’s according to Oppenheimer managing director and technical analyst Ari Wald, who said in a note over the weekend that there are bullish “inflection points” in the underlying market.
“We continue to weigh seasonal headwinds against our view that the evidence for a major top is unconvincing,” Wald said.
Wald said he is encouraged by the fact that the number of stocks on the New York Stock Exchange above their 200-day moving average is more than 60%, which is a healthy sign for a market advance as it shows it is not just a handful of mega-cap tech companies driving gains.
“We emphasize that market breadth remains constructive and that defensive leadership may represent a ‘catch-up’ from prior underperformers,” Wald said.
Based on the chart, Wald said traders can buy last week’s breakout to new cycle highs in the S&P 500, with a stop-loss set at the 5,650 level on the close.
A stop-loss is a risk management tool used by traders to automatically sell a security when a certain price is reached.
For the S&P 500, the 5,650 level represents a potential downside of just 1%, while Wald’s bullish price target of 6,000 in the first half of 2025 represents a potential upside of 5%.
Wald’s 6,000 price target for the S&P 500 is based on the average bull market cycle.
“The S&P 500 is up 64% in the 23 months between October 2022 and September 2024. Since 1932, the average bull cycle has gained 73% over a 32-month period,” Wald said.
Meanwhile, the average bull market cycle gain is 102% over a 34-month period.
And if the current bull market follows the path of the average bull market, stocks could continue to rise through the end of 2025 and the S&P 500 could reach around the 7,000 level.
That $7,000 target aligns with a bullish prediction from Evercore ISI, which said in June that the AI craze could push stocks higher in 2025.
Beneath the surface of the broad market, Wald said he is encouraged by the “right” leadership that is making new highs, including in the industrial sector.
“We view the industrial cycle top as confirmation of an intact bull market,” Wall said.
Record highs in the financial sector are another positive sign for the broader stock market, while the technology sector could be gearing up for its next big move higher, according to Wald.
“Tech is coming off an all-time high in both absolute and relative terms in July. While the relative trend in the sector has moderated, we still believe that technology represents one of the strongest long-term structures in the market,” Wald said.
Finally, Wald highlighted the healthcare sector as another area of the market that is showing resilience, even as it lags behind other sectors.
While the healthcare sector is reaching new all-time highs, in relative terms it is falling to new multi-year lows compared to the S&P 500.
“We believe the divergence between the absolute and relative trends in healthcare speaks to the breadth of the market: even lagging sectors are recovering,” Wald said.
According to the note, similar scenarios are occurring in the communication materials and services sectors.
Read the original article on Business Insider