- 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.
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 $4. 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.
The $4 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, $4 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 $4 given the risks that lie ahead in the economy. By some valuation measures, $4. Meanwhile, there's still a decent chance of a recession in the next year, with New York Fed economists estimating $4 by February 2025.