The stock market continues to climb to record highs, with few indicators pointing to a near-term top in equity prices. Oppenheimer's managing director and technical analyst, Ari Wald, remains optimistic, identifying key "inflection points" driving the market's momentum.
"We remain cautious about seasonal headwinds but don't see convincing evidence of a major market top," Wald notes. He highlights that over 60% of New York Stock Exchange stocks are trading above their 200-day moving average—a bullish signal showing that the market's gains aren't limited to mega-cap tech stocks.
"Market breadth is constructive, with defensive sectors playing 'catch-up' from previous underperformance," Wald explains.
From a technical standpoint, Wald suggests that last week's breakout to new highs in the S&P 500 presents a buying opportunity. He recommends setting a stop-loss at the 5,650 level, which represents a 1% potential downside. On the upside, Wald sees the S&P 500 reaching 6,000 by mid-2025, representing a 5% gain.
Wald's 6,000 price target aligns with historical bull market trends. "The S&P 500 is up 64% over 23 months, in line with the median bull market gain of 73% over 32 months since 1932," he notes. The average bull market, however, delivers a 102% gain over 34 months, which could push the S&P 500 to 7,000 by the end of 2025 if the current cycle follows historical patterns.
Evercore ISI's forecast, which ties future stock gains to the AI boom, also supports Wald's longer-term outlook. Evercore suggests the S&P 500 could rise to 7,000 by 2025, powered by continued advancements in artificial intelligence.
Wald sees further confirmation of a healthy bull market in the Industrials sector, which has hit new cycle highs. "The Industrials sector's performance reinforces the market's overall strength," Wald says.
He also points to record highs in financials as another encouraging sign for the broader market. Technology, while taking a slight breather from its all-time highs in July, remains structurally strong. "Technology is still one of the strongest sectors in the market, despite a recent moderation in its relative trend," Wald states.
Healthcare is another sector to watch. While the sector is hitting new all-time highs, its relative performance compared to the S&P 500 is lagging. "Healthcare's divergence between absolute gains and relative underperformance highlights the breadth of this market rally—even lagging sectors are participating," Wald explains.
This trend of broad sector participation is also evident in communication services and materials, with these sectors showing resilience despite relative underperformance. Wald sees these developments as further evidence of the broad-based market strength that is likely to keep pushing equities higher.
