As earnings season got off to a mostly positive start in early October, the E-mini S&P 500 climbed as well, hitting just above 1,050 the week of Oct. 5. Analysts expect the market to go higher, with some choppiness during earnings season.
“We’ve got a strong rally ahead,” says Keith Springer, president of Capital Financial Advisory Services. “The S&P is moving with the hopes that the market is coming out of a recession and people are so used to a V-shaped recovery that they think it’s inevitable we’re going to get another one. What you’re seeing is a panic buy at this point, which is pushing the S&P above fair values, above where earnings are going to be for several years out.” He expects the E-mini S&P 500 to reach 1,100 in November.
Dollar weakness could have a negative effect on equities and the S&P. “Because there’s been no interest rate, there’s parking in other currencies. At some point, that’s going to affect equities [when people realize] the dollar’s not buying anything in terms of returns. At some point there needs to be some kind of support in the dollar,” says Richard Roscelli, a broker for Whitehall Investment Management. “The top end is 1128 for the end of the year,” he says.
However, many technicians and cyclical analysts are still looking for the next leg down in a bear market.