ES Goes From Extremely Oversold to Overbought

Our View

Riding a four-week winning streak and with the ES rallying over 400 points from the late-October low, we’ve seen the market go from extremely oversold to overbought in a short period of time. 

Now the question is, has the ES gone up too fast? I think it has, but I also think that's a normal feeling for the size of the rally. 

Chew on this: The VIX traded up to 23.08 on October 23rd and about a month later on Friday November 24th, it closed at the session low, at 12.45. 

More and more Wall Street banks are pushing their S&P projections higher and higher. Last week Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets joined Bank of America’s Savita Subramanian in adopting 5,000 as her year-end target for 2024. 

UBS is expecting the S&P 500 to hit 4,700 by 2024, a base case scenario of 3% upside, while 12% upside in their most bullish outlook. Bonds are UBS's top asset class for 2024. In particular, they're eyeing quality bonds, especially government and investment-grade ones. 

Goldman Sachs research forecasts the S&P 500 index will end 2024 at 4,700, representing a 12-month price gain of 5% and a total return of 6% — including dividends. Lastly, Abby Yoder, US Equity Strategist at JPMorgan Private Bank, expects a 2024 mid-year SPX target of 4,700, adding: The MAG7 has driven the market this year—that means both up and down. I want to get through 2023 before I start talking ES 5,000 but I do think there is going to be another leg up going into the end of the year. I just don't think we are looking at another 4 or 5-week rally.