Markets and S&P 500 Target Update From Lange Financial Services For Beginning Of February 2011. Bullish

[ 0 ] January 31, 2011 |

Just in this evening from Fred and Rob at Lange Financial Services.


Market prospects remain excellent despite some possible near term consolidation and some mid east political concerns. Statistically, the market remains historically cheap. Goldman Sachs [GS] restated its earnings forecast of $96 and $106 for 2011 and 2012 respectively for the S&P 500 reducing to a price/earnings ratio of only 13 times earnings.

Today, ISI Group, the leading economics firm, raised their forecast for the S&P 500 earnings to $97 and $105 for 2011 and 2012. Other major investment firms have similar forecasts. We believed that these projections will prove conservative given a strengthening economy and rising profit margins. We are using $100 and $110 for this year and next. GS believes that the S&P will reach 1500, a target also in the sight of other investment firms by year end. Bank of America/ Merrill Lynch today stated– “Let the new bulls lead the charge above 1300: Our S&P target is 1400, but 1500 more likely”–.

In the past couple of weeks we saw some corrective activity in some of the other popular market indexes. While the S&P was only down 1.8%, the Russell 2000, the NASDAQ Composite, and the Dow Transports were down 3% to 4%. Some of the recent market favorites had corrections of 5% to 10% or more. Was this the correction everyone seemingly has been looking for?

We believe the S&P 500 Index will approach or exceed its all time high of 1550 by early 2012. A fully invested position is still strongly recommended, with new positions being added to and or accumulated during periods of weakness.


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Category: Economics, Markets and Trading