Market bull indicating a good year-end but correction in 2022

The head of equity strategy at the Wells Fargo Securities, who is anticipating the 2021 S&P 500 target to be around 4,825, is predicting that the Wall Street is expected to establish a strong year-end rally and may witness a correction in 2022. The market is bringing the equities to a level that the investments wont’ be able to sustain. The equity market may witness some correction along the way. The stocks may be brought to a level where basic investments and valuations may not be able to support them. The Nasdaq, S&P 500 and Dow Jones all of them ended the past week on record. The Nasdaq and S&P went up by around 7% back in October whereas the Dow Jones registered a gain of 6%. What the market has been witnessing and perceived by numerous individuals and other investors is that the feeling that the market is unbreakable at the moment. The market has received numerous pullbacks and bents, however, never broken.

The equity strategist has listed strong economic fundamentals, reduced capital costs, plethora of cash on the sidelines as fuel prices soar and better-than-expected earnings to be some of the contributing factors. It’s getting late in the bull market and now happens to be a period where irrationality starts to become more rational. Things that you are expecting to happen can actually happen, and most probably will also happen. Harvey has been contending some momentum names, including banks, which happen to be major drivers for the year-end. He is stating the financials to be a stealth leadership act that is anticipated to receive traction from the Federal Reserve plans.

The funny part of the market is that a plethora of people are believing that the all tech-type and high tech stocks are building the momentum. However, looking at the momentum index and ETF suggest that 20% of the stocks are in banks and three of the top names arising in the momentum ETF are also situated as banks, offering higher diversity.