American household net worth is at an all-time high, surpassing $80.66 trillion dollars, according to the Federal Reserve Bank's latest "Z.1" release.
Of the $9.8 trillion added in 2013 alone, $2.19 trillion came from real estate while $3.85 trillion were added thanks in large part to a rising stock market; the benchmark S&P 500 index was up 29.6% in 2013, going up to 31.9% if dividends are added.
With equities being an important factor in household net worth accounting for one-sixth of total assets, will it continue to do so in the weeks and months ahead?
Andrew Busch, editor and publisher of The Busch Update, believes the market is headed higher and says the technicals for the S&P 500 prove it.
"I think what's interesting about this move in the stock market is just how powerful it is," says Busch. "With technical analysis, we're always trying to figure out what patterns are out there so that we can trade off of them and make money."
For Busch, one such pattern is that three of the S&P 500's moving averages have been moving together well over a year now. Those moving averages are the 50-day, 100-day, and 200-day moving averages and they continued to stay more or less parallel despite the market drop in January.
"These three stack on top of each other," says Busch, "with the top line 50, the middle one 100, and the bottom 200, meaning everything's pointing up. Even the selloff in January couldn’t get the 50-day moving average to move below the 100."
Busch also notes that whenever the S&P 500 would hit new highs over the past year, it would drop a little but always to a point higher than its previous drop.
"That also underscores how powerful this move up has been for stocks overall," says Busch, who notes the January drop was to 1,773. "If we see a low below that level, then we change the pattern and then you want to start unloading some stocks. Until that happens, it's full steam ahead."
(See: CNBC's Economics coverage)
Chad Morganlander, portfolio manager at Sifel's Washington Crossing Advisors, agrees with Busch's bullish outlook on the S&P 500.
"We believe that the US equity markets for 2014 will be up perhaps 7% or 8%," says Morganlander, who thinks the economy will show better-than-expected growth this year. "Our GDP forecast is for over 3% for 2014. And, what really drives the stock market – and, it's about 90% correlated – is earnings. We believe S&P earnings for 2014 will be up roughly 7% to 8% and that ties into our price target."
According to Morganlander, the economy's growth is based on more credit, capital investment, and job creation. "We hit a pothole over the last several months," says Morganlander, "but over the next several months, as we start to warm up and the great 'Ice Age' starts to melt, we're going to start to better employment numbers and better employment data coming out."
To see the full discussion on what's next for the markets with Busch on the technicals and Morganlander on the fundamentals, watch the video above.
- stock market