S&P 500: Correction Here Could Be a Great Buying Opportunity for Long-Term Bulls
Last week was exceptional, marked by record highs in the US, German, and French stock markets. Alongside these indexes, gold and Bitcoin surged as well, making new highs in the process.
In this piece, we will focus on the S&P 500 index's performance this year and the outlook going forward. The reasons behind bulls' strength are well-known:
Currently, all S&P 500 sectors are above their respective 50-day moving averages, and in 2024, it has already set 17 all-time highs, marking 1,200 in its entire history.
Ideally, for the S&P 500, a pullback would be healthy, allowing for some breathing room to brace for another surge later this year.
It's crucial to note that the S&P 500 has surged around 75% since March 2020. The index made new all-time highs in the process and is currently valued at 21 times expected earnings for the next year, indicating that it's not considered cheap.
A short-term correction, even at -10%, would be considered healthy. This is a normal occurrence amid bull markets, considering the index has experienced at least a -10% drop in the last 95 years. Such a dip could present a good opportunity to buy again.
March historically has been characterized by starting well and then turning challenging for the last 21 years. Whether or not a significant fall occurs in March, the idea is to consider a decline as an opportunity to buy, even if it's at 10% or more.
The S&P 500 company results have generally been excellent, with 75% beating expectations, and earnings showing a +4% increase in the fourth quarter.
Noteworthy sectors include Communication Services (NYSE:XLC), Consumer Discretionary (NYSE:XLY), utilities (NYSE:XLU), and technology (NYSE:XLK), while energy (NYSE:XLE), Materials (NYSE:XLB), health care
Read more on investing.com
