Get your party hats out bulls. The S&P 500 (^GSPC) has closed above 2,000 for the first time ever. This hated rally made it all the way to the next “big round number” when just a little more than five years ago the devilish low of 666 seemed to make a day like this a pipedream.
So now that we’re here...what’s next? Jon Najarian, co-founder of OptionMonster.com, notes that this could be just the beginning. “Take a look at where we were last year...from the fed meeting in February to Jackson Hole, we were up 7.85%. This year? Almost exactly the same number. So the scary part for the bears is we all know what came after that. We put on another 20 [percentage] points to the upside.”
Najarian, who called for an 8% gain for this year back at the end of 2013, points out that even just a doubling of growth so far this year could conceivably leave us with a very above average 16% year. That would tack on another 160 points to the S&P 500. In the interest of being a bit more cautious Najarian has a more conservative updated target of 2050 by New Year’s Eve.
What gets us there is key and the fortunes of the market could rise or fall with it: financials (XLF). “They look like they’re breaking out here. A lot of them could provide significant boosts to the market,” he says.
A boost in the financials depends a lot, Najraian believes, on a stabilization in Germany. The yield on a 10-year German bund is sitting at 0.94%. Najarian would like to see that number bottom and creep higher. That would give the financials here at home the catalyst they’re looking for and that is what will largely determine the fortune of the market through the rest of the year.
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