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LIVE MARKETS-BofA sets 4,600 target for S&P 500, draws parallel to 2000

Wed, 24th Nov 2021 14:28

* U.S. equity index futures suggest opening weakness

* Euro STOXX 600 index down ~0.5%

* Dollar up; bitcoin, gold, crude down

* U.S. 10-Year Treasury yield rises to ~1.68%

Nov 24 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com

BOFA SETS 4,600 TARGET FOR S&P 500, DRAWS PARALLEL TO 2000
(0911 EST/1411 GMT)

BofA Global Research set a 4,600 target for the S&P 500 at
year-end 2022 and compared this year's market exuberance shown
in retail trading mania and frenzied IPO activity to the market
activity in 2000 in its U.S. equity outlook note.

"There are too many similarities between today and 1999/2000
to ignore," wrote a group of strategists led by Savita
Subramanian, further noting that one out of four of the IPOs of
1999 are today's blue chips.

The PT implies around 2% downside to S&P 500's last
closing price of 4,690.70 as strategists said rising wage growth
is one of the biggest headwinds for companies heading into the
new year.

They add that the 'TINA' (there is no alternative) argument
for equities would be less compelling if cash yields rival the
current S&P 500 dividend yield of 1.3%, and if the 10-year U.S.
Treasury yield rises to 2% by 2022-end, as BofA rates
strategists have predicted.

Strategists prefer to stick with small caps and expect the
group to outperform large caps at least in H1 2022.

Among S&P sectors, BofA is overweight energy and
financials that offer inflation-protected yield as well
as healthcare, and underweight communication services
, consumer staples and consumer
discretionary.

Here's a look at some of the top Wall Street analysts'
outlook for U.S. stocks in 2022.

(Medha Singh)

*****

NASDAQ COMPOSITE: CAN'T CATCH ITS "BREADTH" (0900 EST/1400
GMT)

The Nasdaq Composite is only down around 1.8% from
its Nov. 19 record-high close. That said, measures of internal
strength continue to show broad, and intensifying, weakness.

For example, the Nasdaq daily advance/decline (A/D) line
topped on Feb. 9 of this year, before ultimately collapsing to a
9-month low in mid-August:

Despite, IXIC new highs since then, including just late last
week, this closely watched breadth measure remains well shy of
its 2021 highs. Earlier this month, it failed to reclaim its
200-day moving average.

So far this year, there have been 39 negative breadth days.
That is, the Composite closed higher, but the A/D line fell that
day. Of note, around 15% of those days have occurred in just the
past 30 days or so, suggesting recent internal tension.

Also, of those 39 negative breadth days, 16 of them occurred
with the composite registering a record close. Three of them
have occurred in November, with the last such day Nov. 19, or
what is now the Composite's 16,057.44 record close.

Just looking back to early 2020, periods of A/D-line
divergence vs the Composite, as well as nearby clusters of
Nasdaq record-high closes/negative breadth days, did precede
varying degrees of IXIC instability.

Additionally, the A/D line has now fallen seven-straight
days and is threatening its August trough. A break below this
level will put it at a more than one-year low.

Therefore, unless the Nasdaq can quickly catch its
"breadth," risk remains for a much deeper decline from the
recent peak.

(Terence Gabriel)

*****

FOR WEDNESDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400
GMT - CLICK HERE:

(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)

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