From the May 01, 2010 issue of Futures Magazine • Subscribe!

E-mini S&P 500: Where to now?

The old saw "buy in May and go away" could be reversed this year if the current trend in equity indexes continues as many of our experts suspect.

In mid-April equity index markets hit levels not seen since just after the fallout of the Lehman implosion in September of 2008 and some analysts expect the S&P 500, which nearly hit 1,200 in early April, to continue its hot streak regardless of seasonal tendencies.

“The market will continue higher from here,” says Spencer Patton, chief investment officer at Steel Vine Investments. “The market has been on a relentless tear higher. For the near-term, there are simply too few people that believe in this market,” he says, adding that the S&P will move to 1,250 before we see a change in trend.

“The economy looks very strong; the market technically looks very strong. Fundamentally, all the benchmarks are pointing higher, all the economic statistics are pointing higher. Earnings look to be gangbusters. They’re talking about 60-75% over a year ago,” says Keith Springer, president of Capital Financial Advisory Services.

Springer says pessimism is keeping individual investors out of the S&P. “The individual investors remain non-believers, and not until they get into this market will the end [of the rally] be here. We’re nowhere near that because the individual investor is nowhere close to getting in. They’re really cautious and nervous – you can see that by the bond inflows. At some point, there will be a panic buy that will signify the end of this rally,” he says.

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