S&P 500 Extremely Elevated, Sell-Off to Come
The S&P 500 continues to remain at extremely elevated levels, with many professional and retail investors looking for a market sell-off. What is surprising is that the S&P 500 has risen in spite of general market sentiment that hasn’t become overly bullish.
New data from Bloomberg show that the S&P 500 has moved up towards analysts’ estimates to such a level that the market is approximately five percent away from the mean forecast. This is the closest the S&P 500 has gotten to Wall Street estimates in the last seven years, with the historical difference normally around 14%. (Source: Rupp, L. and Gammeltoft, N., “U.S. stocks fall as American manufacturing index slips,” Bloomberg, April 1, 2013.)
What this means is that the S&P 500 has exceeded the current market sentiment and has continued to rise. At this point, either the S&P 500 has gotten far ahead of the underlying fundamentals, or market sentiment will turn even more bullish, as analysts begin to increase their expectations for this year.