In recent months, the economy has shown signs of fragility, despite its overall strong performance. Piper Sandler, a prominent investment bank, has issued a warning about a potential 10% correction for the S&P 500 in the summer of 2024. Craig Johnson, the bank’s chief market technician, has highlighted various warning signs, such as a lack of breadth and a slowdown in momentum, indicating that the growth observed since January is no longer sustainable.
Johnson also noted that many investors are oblivious to the danger, driven by the fear of missing out (FOMO) trend. It is understandable why traders are eager to capitalize on the current boom, considering the significant rise of top-performing stocks since the beginning of the year and the bullish price targets associated with them.
Despite the well-documented risks, including a market concentration similar to that of 1929 and concerns about the artificial intelligence (AI) sector being a bubble, bearish analysts are becoming increasingly scarce. JPMorgan’s Marko Kolanovic, who previously held a bearish stance, had the lowest price target for the S&P 500 at 4,200. Even after the recent warning, Piper Sandler’s price target for the benchmark index at the end of 2024 remains relatively high at around 5,050, only 7.81% below the current levels.
It is important to note that the recent downturn in major stocks, the S&P 500, and even the crypto markets does not necessarily indicate an impending crash. It could simply be a common correction following a significant rise in the year-to-date charts.
Investors should be cautious and understand that investing carries risks, and the content on this site should not be considered investment advice.
