1. $S&P 500(.SPX)$ Technical Points Forecasts
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As of post, the $S&P 500(.SPX)$ retreated from its approaching August 2022 peak. Because of the previous excessive pull-up, the retracement recently is considered healthy. And $S&P 500(.SPX)$ is still in its weekly and monthly upward trend.
However, see from the daily chart, According to Axel Rudolph, senior analyst at IG, he pointed out: "In fact, we can see a small rising wedge structure on the daily chart, which may indicate that at least a short-term top will be formed soon."
We need to pay attention to whether its daily line can stand firm at the 20-day moving average (4378 points).
Otherwise, a slip-through and daily chart close below the one-month tentative support line at 4228 points would need to be seen.
Confirmation of a more significant correction lower taking place would be a fall through the 24 May low at 4,103.98.
In this case the 200-day simple moving average (SMA) at 3,975.14 would be back on the radar over the northern hemisphere summer months.
If goes up, the next important resistance level is 4600-4650. After touching this range, there are two possibilities: directly break through this range and make a new high (ATH); or pull back, but it should not exceed 10%.
Below are the forecasts of different banks. As for how it will go, no one can predict.
By Capital_Insights
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2. $S&P 500(.SPX)$ Year-end Forecasts
Many Wall Street firms forecast that it would hit 4200 to 4300 by year's end. Also, the $S&P 500(.SPX)$ 's ability to clear resistance near 4300 is a good sign for the current stock market forecast.
BCA Research, in a report titled "So Far, So Good On The Road To 4500," "But its optimism for the second half of the year? Clearly bridled. We remain tactically overweight equities but are preparing to transition to equal weight once the S&P 500 reaches 4500. "
3. $S&P 500(.SPX)$ Sectors be Focused on
After experiencing the upward movement of the index and the rebound of valuation since the beginning of the year, as of the end of June, the Forward PE of the $S&P 500(.SPX)$ and $NASDAQ(.IXIC)$ were 23.94 and 37.23 respectively, corresponding to 92.83% and 100% of the valuation quantiles in the past ten years. already in a high position.
In terms of industries, the absolute valuations of most industries and the quantiles corresponding to the valuations are not low. Especially for information technology, which has many AI constituent stocks, the valuations of growth-oriented industries are all above 50%, and the valuations of only a few cyclical industries are still at a low level.
Nine of the 11 sectors in the S&P 500 are likely to report year-over-year earnings growth, with five likely to post double-digit growth, FactSet noted. They include communication services (36.3%), utilities (26.2%), consumer durables (21.3%), information technology (12.4%) and financials (11.2%).
Investors face a challenging second half of 2023, however, the technology, consumer and healthcare sectors offer opportunities.
As recession risks mount, pundits tend to look for opportunities in defensive areas of the market, such as the technology and consumer sectors.
Technology Sector $Technology Select Sector SPDR Fund(XLK)$ : Analysts at French asset manager Carmignac highlighted the opportunities created by artificial intelligence and the industry's favorable development in the current economic environment of falling long-term interest rates and slowing growth.
Consumer Sector $Communication Services Select Sector SPDR Fund(XLC)$ : This sector is focused on achieving a lower cost base and the upcoming tightening of monetary policy. Factors such as deflation, a slowing economy and an intensifying price war among retail distribution groups form key considerations.
Other sectors that could benefit in the second half of 2023 include: Healthcare $Health Care Select Sector SPDR Fund(XLV)$ . According to Carmignac analysts, the sector is set to continue its upward trend with a combination of short-term resilience and long-term growth prospects.
However, the pace of the uptick appears to be much more modest compared to the expected strong growth in the technology and communications sectors. In addition, the relative performance of the industrial sector during periods of reversal has unexpectedly moved upwards, while cyclical sectors may decline during recessions.
In the end, Alpha is the opportunity and Active equities for a new era.
The medium-term view for the market is starting to shift focus from macro factors to micro, or stock specifics, then the longer-term outlook takes that a step further.
Equities historically have been the highest-returning asset class over the long term. However, higher stock valuations than at the start of the prior regime plus higher interest rates means less return from markets broadly (beta).
We will see more dispersion in earnings estimates, valuations and stock returns. The result is that the time ahead will see active return being a bigger part of investors’ overall return profiles.
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