The stock market will soar another 16% this year as long as it stays above a key technical level, analyst says

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The stock market will soar another 16% this year as long as it stays above a key technical level, analyst says
Reuters / Brendan McDermid
  • The S&P 500 is bound to see another double-digit gain to end the year, Frank Cappelleri said.
  • CappThesis' founder sees the index hitting 6,100, so long as it stays above a key bullish threshold.
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The stock market is still primed for another year of double-digit gains, so as long as the S&P 500 remains above a key threshold: 4,800.

That's according to Frank Cappelleri, a Wall Street veteran who founded the research firm CappThesis. Cappelleri thinks the S&P 500 is still on track to notch 6,100 in 2024. That implies a 28% upside for the year and a 16% climb from its current levels, as long as the benchmark index remains above the technical threshold of 4,800.

The S&P 500 has soared by over 27% from its low in October 2022, officially crossing the threshold into a bull market. Cappelleri told CNBC last week that since then, the S&P 500 had climbed consistently, troughed at higher levels, and seen a "clean breakout" through five technical thresholds — three signs that constitute a bullish pattern in the market.

He said the "6,100 level was based on the breakout through 4,800, which was really just a very big bullish pattern," adding: "The good thing right now is that the market hasn't pulled back much yet, of course. And so it has the ability to pull back, say, 7% to 8% and still keep that breakout target intact."

The bullish run-up hasn't been lost on investors, who have grown more exuberant about stocks in recent months as they've priced in Federal Reserve rate cuts and warmed up to the possibility of a soft landing for the US economy.

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The CME FedWatch tool indicates traders are pricing in a 66% chance the Fed could cut rates by 75 basis points or more by the end of the year. Meanwhile, in the American Association of Individual Investors' latest investor-sentiment survey, 50% of investors said they felt bullish on stocks over the next six months.

"It tells us that of course, investors want to continue to buy the dip," Cappelleri added.

Some forecasters, though, have warned of storm clouds brewing over the market given the risks that lie ahead in the economy. By some valuation measures, stocks are mirroring the bubbles of 2000 and 1929. Meanwhile, there's still a decent chance of a recession in the next year, with New York Fed economists estimating the US has a 58% chance of entering a downturn by February 2025.

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