Shane Oliver, head of investment strategy at AMP Capital Investors, says improving economic news could send the Standard & Poor’s 500 Index up to 1,250 soon.
That would represent a 28 percent gain from Friday’s close of 979.26. Already the market has surged 47 percent from its March low.
“You can say the markets are getting overbought, due for a bit of a pullback,” Oliver told CNBC.
“But the flipside is the fact that the markets have been able to break out to new highs for the year, the volumes have been reasonable, the number of stocks participating in the rally … has been very high.”
He notes: “That augurs well.”
The market has broken through the neckline of a head-and-shoulders pattern indicating it’s “now on its way to around the 1,200 to 1,250 level for the S&P 500,” Oliver says.
“I think there’s a lot of upside to go. Yes, there's going to be setbacks along the way, but I think the broader trend will be up."
As for the economy, “Existing home sales are up for three months in a row,” Oliver notes.
“The leading indicators are up three months in a row, which traditionally is a clear sign of recovery,” and corporate earnings are coming in better than expected.
Others feel the same way.
“What’s driving the market is positive earnings surprises, and the economic tea leaves are telling us the recovery is at hand,” Philip Dow of RBC Wealth Management tells Bloomberg.
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