This Top Market Analyst Says S&P 500's Ceiling May Be at 3900

September 29, 2022 7:29 AM EDT
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Adam Crisafulli, the founder and president of Vital Knowledge, has reflected on the debate about when the S&P 500 could stage another bear market rally and how far could it go.

While the S&P 500 closed nearly 2% yesterday to return to trading above the 3700 handle, the index is already down 0.9% in pre-market trading. Crisafulli, one of the most closely watched market commentators, says the S&P 500 may have its ceiling at around 3900.

“3900 is under best case conditions of a 17x PE and $230 in EPS, numbers that most people feel remain too optimistic – the consensus view is still penciling in ~15x and ~$220, for an SPX of ~3300),” Crisafulli wrote in a daily note to clients.

Technically, the U.S. equities may get a near-term boost from extremely bearish sentiment, which may help facilitate the bear market rally. Bernstein strategists said they expect to see the third bear market rally this year amid very negative market sentiment.

As far as catalysts are concerned, Crisafulli sees investors focused on the jobs data next week.

“Remember, the Fed wants to see not just cooling inflation but also a rise in the unemployment and/or the participation rate (in order for Powell and his colleagues to breathe a sigh of relief, the US economy needs to start printing monthly jobs reports of at least <200K),” the analyst added in a note.

By Senad Karaahmetovic

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Sanford C. Bernstein, Standard & Poor's, Senad Karaahmetovic