Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24
Bitcoin Trend Forecast, Crypto's Exit Strategy - 31st May 24
Zimbabwe Officials Already Looking to Inflate New Gold-Backed Currency - 31st May 24
India Silver Imports Have Already Topped 2023 Total - 31st May 24
Gold Has Done Its Job – Isn’t That Enough? - 31st May 24
Gold Stocks Catching Up - 31st May 24
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Can the S&P 500 Stock Market Index Continue Rising?

Stock-Markets / Stock Markets 2013 Aug 02, 2013 - 08:55 PM GMT

By: InvestmentContrarian


Sasha Cekerevac writes: With the S&P 500 at all-time highs, market sentiment clearly is in the bullish camp; this must mean that all of our problems are solved and the future is bright for everyone—

Hold on a minute: if this were true, why would consumer confidence regarding the future decrease?

The Conference Board just released its Consumer Confidence Index, which reports favorable current conditions by respondents. I think we can all agree that the current economy is better than the conditions we’ve experienced over the past few years.

However, what is interesting is that consumers’ future expectations weakened during the month of July. Those surveyed lowered their expectations for business conditions over the next six months, as 19.1% are looking for a favorable outlook versus 21.4% the previous month. And the job picture appeared even worse as the number of those surveyed who are expecting to see more jobs over the next six months declined to 16.5% in July versus 19.7% the previous month. (Source: The Conference Board, July 30, 2013, accessed July 31, 2013.)

How does this relate to market sentiment and the S&P 500?

While consumer confidence is above year-ago levels, indicating that the current conditions are stronger, consumers are questioning the strength of the economy in the second half of 2013.

If the S&P 500 is a forward-discounting mechanism, there is the possibility that market sentiment has gotten far ahead of economic reality. I believe that a certain portion of the increase in the S&P 500 has been pushed by market sentiment that is focusing on Federal Reserve policy and not the underlying fundamentals.

The chart for the S&P 500 Large Cap Index is featured below:

Chart courtesy of

Can the S&P 500 continue rising? Absolutely; as I said many times, market sentiment will shift when a new catalyst emerges. I believe that this could very well be the shift in monetary policy coming later this year.

If consumers are worried about the future, this will have an impact on the S&P 500. Because the U.S. economy is so dependent on consumer spending, any marginal pullback by the public would certainly hurt both earnings and revenues.

While market sentiment is firmly in the bullish camp, I believe that once the Federal Reserve begins shifting its monetary policy stance, we could see a significant adjustment to the valuation of the companies within the S&P 500.

Both market sentiment and the S&P 500 have priced in most of the good news. At this point, any shock to the system would quickly send both market sentiment and the S&P 500 down significantly. While some investors might hope for the best, I prefer to prepare for the worst. One must be ready to take advantage of significant sell-offs and jump on these opportunities. At this point, the risk-to-reward has become asymmetrical, with growing risks and reduced upside potential.

This article Can the S&P 500 Continue Rising? was originally published at Investment Contrarians

By Sasha Cekerevac, BA

Investment Contrarians is our daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”

About Author: Sasha Cekerevac, BA Economics with Finance specialization, is a Senior Editor at Lombardi Financial. He worked for CIBC World Markets for several years before moving to a top hedge fund, with assets under management of over $1.0 billion. He has comprehensive knowledge of institutional money flow; how the big funds analyze and execute their trades in the market. With a thorough understanding of both fundamental and technical subjects, Sasha offers a roadmap into how the markets really function and what to look for as an investor. His newsletters provide an experienced perspective on what the big funds are planning and how you can profit from it. He is the editor of several of Lombardi’s popular financial newsletters, including Payload Stocks and Pump & Dump Alert. See Sasha Cekerevac Article Archives

Copyright © 2013 Investment Contrarians - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Investment Contrarians Archive

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in