The DataTrek Research said in its latest note, the S&P 500 index is poised to book a 14% yearly gain, as the US benchmark’s rally from its March 23 low is closely tracking similar price action witnessed during 2009 Global Financial Crisis (GFC).
Key quotes (via Business Insider)
“As of June 15, 58 days off the March 23 bottom, the S&P 500 was trading 37.1% higher. Back in 2009, 58 days after the March 2009 low, the S&P 500 was trading 39.4% higher.
As the S&P 500 has traded higher, its attempts to get ahead of the 2009 rally have failed. On April 14, “the 2020 rally got ahead of 2009 by 11 full points (+27.2% from the lows vs +16.4% in 2009). The 2020 rally then gave up all those gains in the next 5 days.
The 2020 rally off the March lows has few historical comparables and 2009 is certainly the best fit both in terms of timing and magnitude.
First, valuations are far apart. On day 58 of the S&P 500’s 2009 rally, the index traded at 10.4x trailing earnings. Today, the index trades at 19.6x trailing earnings.
Don’t overthink it — 2020 is just like 2009.
If the comparison between 2009 and 2020 continues to hold, then the S&P 500 is set for a breather” in the short term.
If history repeats itself that would put the S&P at 3,588 on December 31, for an 11.1% price gain on the year.
A rally to those levels would represent new record highs for the index and a 14% gain from current levels.”
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