This Is the Place Where S&P 500 Rallies Have Come to Die
- S&P rises 7th time in 8 weeks even as earnings outlook dims
- ‘Don’t get caught up in price momentum,’ Morgan Stanley says
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As hard as stocks plunged last quarter, their recovery in the New Year has been just as swift. A warning to S&P 500 bulls getting used to the upward trajectory: This is where rallies have fallen dead in the past.
While valuation makes a poor tool for market timing, there’s evidence its force becomes felt when the benchmark starts to approach 2,800. It’s 25 points from that level now, after vaulting 18 percent since Christmas. More ominously for bulls is the sudden squishiness of 2019 profit estimates. It’s tough to fashion a case for more gains when the foundation keeps sagging.