These 5 Signals Continue to Point to a New Market High in 2023
In August, we observed several notable positives for the stock market that reinforce our view.
Last month, we published a commentary titled: "History Points to a New Market High in 2023." Despite a give back in the month of August, the following five signals continue to reinforce our view that we will see a new high this year:
Economic activity continues to expand at a healthy pace. Real GDP grew 2.0% in the first quarter and slightly edged up to 2.1% in the second quarter (annual GDP growth has averaged just 1.5% over the past 20 years).
The current Fed funds rate was fixed at 5.33% at the end of August, well below rates seen during the recessionary years of 1969-1970, 1973-1974, and 1981-1982 (all over 10% with an all-time high of 19.1% in 1981).
Corporate profits have been contracting since the 1st quarter of 2022. Wall Street analysts now expect an uptick in profits for the current quarter and an 8% improvement for the 4th quarter which should drive the stock market higher.
We researched first year returns for 8 bull markets since 1970 and found that the average index return after the first 6 months was 30% and 46% for 12 months. Hence, applying the average second six month rise of 12% to the S&P 500 Index close on June 28th would result in an index reading of 4900 by year end, a new all-time record high.
Golden Eagle identified a proprietary bullish signal at the end of February. We saw new highs exceeded new lows for the first time in more than a year. The index remained positive since February, but went negative on August 5th coincident with softening stock prices. It turned positive again before the end of August as the market advanced in four of the last five trading days.
These 5 Signals Continue to Point to a New Market High in 2023
In August, we observed several notable positives for the stock market that reinforce our view.
By
Golden Eagle Strategies
Last month, we published a commentary titled: "History Points to a New Market High in 2023." Despite a give back in the month of August, the following five signals continue to reinforce our view that we will see a new high this year:
Economic activity continues to expand at a healthy pace. Real GDP grew 2.0% in the first quarter and slightly edged up to 2.1% in the second quarter (annual GDP growth has averaged just 1.5% over the past 20 years).
The current Fed funds rate was fixed at 5.33% at the end of August, well below rates seen during the recessionary years of 1969-1970, 1973-1974, and 1981-1982 (all over 10% with an all-time high of 19.1% in 1981).
Corporate profits have been contracting since the 1st quarter of 2022. Wall Street analysts now expect an uptick in profits for the current quarter and an 8% improvement for the 4th quarter which should drive the stock market higher.
We researched first year returns for 8 bull markets since 1970 and found that the average index return after the first 6 months was 30% and 46% for 12 months. Hence, applying the average second six month rise of 12% to the S&P 500 Index close on June 28th would result in an index reading of 4900 by year end, a new all-time record high.
Golden Eagle identified a proprietary bullish signal at the end of February. We saw new highs exceeded new lows for the first time in more than a year. The index remained positive since February, but went negative on August 5th coincident with softening stock prices. It turned positive again before the end of August as the market advanced in four of the last five trading days.
