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Investing.com -- Piper Sandler expects the S&P 500 to surpass its year-end target of 6,600, as U.S. equities continue to notch fresh highs despite persistent skepticism about this bull run.
The broker’s technical analysts said the index is already within striking distance of that level, and current market momentum suggests it may be met before December.
“Investors should remain committed to “buying the dips and not selling the rips” as the S&P 500 and Nasdaq achieve record highs, despite many rising doubts about its sustainability,” analyst Craig W. Johnson said in a note.
Johnson notes that the S&P 500’s 6,600 price target—just 2.2% above recent levels—could be met as soon as September and “may act as just a ‘pit-stop’ before continuing even higher into year-end.”
He identified resistance at the record high of 6,481, 6,500, and Piper’s year-end target of 6,600, while support stands at 6,427, 6,366, and further down at 6,227
The Dow Jones Industrial Average has also been probing new highs, while the Russell 2000 and other small- and mid-cap benchmarks have staged breakouts above key moving averages.
Market breadth indicators support the bullish case. The 10-week moving average of the 26-week new high indicator reached its strongest level since January, while the 40-week technique also hit its highest mark since March.
Meanwhile, volatility fell to its lowest point of the year, with the VIX dropping to 14.30.
Investor sentiment, however, remains subdued. The American Association of Individual Investors (AAII) survey showed the bull-bear spread at -16.3, its weakest since spring.
According to Johnson, this widespread pessimism “will likely act as a tailwind for stocks to continue climbing into the end of summer.”
Sector-wise, all twelve unweighted sectors tracked by Piper Sandler are in uptrends, with Industrials, Technology, and Communications standing out as leaders. Energy, Utilities, and Consumer Staples were identified as laggards.
Johnson is also pointing to strength in specific groups such as residential building companies, off-price retailers, and laser technology stocks, all of which have seen relative strength gains.
The analyst said he will be closely monitoring the gradual decline in bond yields and energy prices, noting that both serve as catalysts for their bullish outlook on the stock market.