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The S&P 500 has marched steadily higher from its March 23rd low against a backdrop of investor skepticism. Analysts at JP Morgan Asset Management expect an eventual retracement on the S&P 500 Index but to stay range bound in the near-term. In contrast, Charles Schwab thins that a new bull market has started.

Key quotes of JP Morgan

“S&P 500 futures positioning remains net short, the AAII bull/bear survey is not showing signs of reckless optimism, and the put/call data is only starting to show signs of complacency. One could argue that valuations are stretched – and they would probably be right – but valuations don’t tell you much about near-term performance. The market doesn’t need a whole lot of good news, it just needs bad news to remain at bay.”

“At some point, markets will pull back. This could be caused by any number of things: a reacceleration in case growth, any sign that policymakers are starting to reign in stimulus, or a failure on the part of the labor market to rebound in line with expectations. As long as these things do not materialize, equities will likely avoid retesting the March 23rd lows; at the same time, however, reaching a new all-time high in the near-term seems unlikely.”

“Volatility looks set to remain elevated; remember, it took over a year for the VIX to drop below 20 after peaking in November 2008. As such, we expect the market will be range bound going forward, but cyclical value could outperform growth as the data improves. As such, we maintain our preference for quality companies, but are increasingly comfortable taking a bit more risk.”