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Investing.com -- The Sevens Report has updated its outlook for the S&P 500, outlining a range of valuation targets for the second half of 2025 as markets sit near record highs but face growing uncertainty.
Under the "current situation" scenario, the fundamental valuation range has been raised to 6,195–6,343, with a midpoint of 6,269, reflecting “the transition to expected 2026 earnings of $295/share,” up from $265 previously.
Notably, the S&P 500 recently tested this midpoint but failed to sustain gains above it, suggesting “markets are largely priced to perfection at the start of H2’25.”
The lower bound of 6,195 has emerged as a “very near-term support,” while 6,269 now acts as a “technical pivot-point,” with 6,343 as the next upside target.
In a more optimistic “better-if” scenario, Sevens lifted its target to 6,600, assuming $300/share in earnings and a 22X multiple.
That target is “roughly 6% above yesterday’s close,” offering limited room to run unless fundamentals dramatically improve. Still, the firm says a break above 6,600 could open the door to the 161.8% Fibonacci extension near 6,860, the firm said.
The downside “worse-if” scenario now targets 4,675–4,950, using a $275/share EPS estimate and a 17–18X multiple.
The midpoint of 4,813 carries “extreme technical importance,” having acted as key resistance and support over the past four years.
A “violation” of this level on a weekly close “would almost certainly mean the onset of a painful bear market,” potentially triggering a decline toward 3,675, a 40% drop from recent highs.
While a collapse of that magnitude may sound “far-fetched,” Sevens warned, history shows it wouldn’t be unprecedented given past cyclical bear markets.