The LPL Research Chief Market Strategist Ryan Detrick discusses some potential worries, while also showing why any weakness could indeed be a buy the dip opportunity, as many rare signals are flashing from a longer-term perspective which should lead to eventual higher prices. Lastly, it is Earth Day this week, so Ryan discusses the impacts of that and Sustainable Investing with LPL Research Head of Sustainable Investing, Jason Hoody.
Three Things That Scare Us
After more than an 80% rally and 23 more new highs in 2021, some potential worries are creeping up. On the sentiment front, various polls and put/call ratios are showing extreme optimism, which could be bearish from a contrarian point of view. Additionally, recent manufacturing and service data was the best in years, again suggesting a higher bar, as everyone now knows the economy is roaring back. Lastly, Ryan discusses how valuations are indeed stretched and as the chart below shows, this bull market is tracking the 2009/10 perfectly and that one tired right about now.
Four Reasons to be Bullish
Ryan also discusses four reasons to expect higher prices this time a year from now—meaning, if there is any weakness, it could be a nice buying opportunity. For starters, the first quarter saw the S&P 500 Index up 5.8%, which is right in the sweet spot for the rest of the year returns to be strong. Also, the S&P 500 didn’t violate the December lows in the first quarter, yet another signal that returns could be strong by year-end. Also, Ryan discusses that strong 12 month returns tend to resolve higher and lastly, discusses why market breadth is historically strong and that is another good sign.
Earth Day is Here
On April 22, the world will mark the 51st Earth Day. Earth Day marks a chance to learn about the environmental challenges we face today, ways to become more involved, and ways to align one’s personal choices to elicit positive environmental and social changes. Increasingly, more investors are adopting a sustainable investing approach in order to align their investment portfolio with companies seeking to make a positive impact.
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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
All index data is from FactSet.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This Research material was prepared by LPL Financial, LLC.
For Public Use — Tracking #: 1-05134769 (04/22)