Why The S&P 500 Will Rise To 3,000, and The Fed Has Only One More Hike

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

Otherwise, enjoy the column!

Subscribe to the Monster Stock Market Commentary to get the Daily Monster Market Commentary and join the 2,934 subscribers getting it for FREE!

Why The S&P 500 Will Rise To 3,000, and The Fed Has Only One More Hike

[widget id=”text-19″]

The S&P 500 may be nearing a pretty big breakout soon. The chart of the S&P 500 looks like a giant ascending triangle, and the breakout would likely occur sometime before the end of May. Basically, at this point, rise above 2,730 would signal the breakout along the downtrend, which has been in place since late January.

[widget id=”text-23″]

Strong Earnings

Again, strong earnings will continue to stoke the stock market’s rise, and I still think the S&P 500 will rise to 3,000 in 2018. Yeah, crazy! I know. But listen to these stats, from Dow Jones S&P Indices:

Almost 53 percent of the companies in S&P 500 have reported results so far, and about 78 percent have beat earnings estimates, with only 16 percent missing. In the first quarter of 2017, with the companies reporting results, only 74 percent beat estimates, with 19 percent missing.  Meanwhile, revenues are up nearly 9.4 percent vs. the same period a year ago.

[widget id=”wordads_sidebar_widget-41″]

A Rise To 3,000

Estimates are calling for FY 2018 earnings of $154.23 per share, and with the S&P 500 currently at 2,648, we are trading at 17 times 2018 earnings, and 15.6 times 2019 earnings estimates of $169.54. And so what multiple would the S&P 500 be at should it rise to 3,000? Just 17.7 times 2019 estimates, far from nosebleed levels.

[widget id=”text-28″]


Additionally, the inflation and increasing rate narrative I think it is starting to lose steam, trimmed mean PCE today came in at 1.77 percent in March vs. a year ago. I continue to believe this is the best measure of inflation on the traditional measures,  as it throws out the top and bottom outliers. Meanwhile, the velocity of MZM is my all-time favorite predictor of future inflation and yields, and it continues to flatten out at 1.3. Does the MZM chart look familiar?

Subscribe to the MCM Stock Market Commentary to get it Daily and join the 2,934 subscribers getting it for FREE!

It should remind you of a chart of 10-year interest rates.

[widget id=”text-22″]

Falling Rates

Based on the data above, and these technical charts below, I continue to believe that the 10-year will revert to the uptrend, around 2.6 percent. tnx

Then there are this charts for the 30-year yield.

30 year

and this one for the 10-year.

[widget id=”text-23″]

One More Rate Hike

The moment of truth? I don’t know about that, because I’d be shocked if rates continue to rise. In fact, I think the Fed may only raise rates one more time this year.

There I finally said it, I have been thinking about this a lot lately, I have been on the fence about saying it, but there you go.

One more rate hike in 2018, making a total of only 2.


[widget id=”text-19″]

[widget id=”wordads_sidebar_widget-41″]

Mott Capital’s Reading The Markets – An In-depth Global Macro Stock Market Commentary – In Video Format – See How Michael Dissects The Markets

Just $200 Per Year – Get Your Free 2 Week Trial

Recent Videos:

Why It Is Time To Dump Starbucks, Plus A Look At ACAD

The Market Continues To Sink

It’s Back! Apple Investors Are Worried Once Again

A Review Of Netflix, IBM And Earnings Outlook

Taking A Look The Banks, And Prepping For Earnings Season

Passive Investing May Not Work In 2018

Stock Surge, A Breakout Is Close

Trade War Worries Returns

Free Articles Written By Mike:

Why McDonald’s Big Stock Rally Won’t Last

Apple Traders Bet on 8% Drop as Earnings Approach

Under Armour’s Stock Faces a 14% Decline Short-Term

Alibaba Stock May Rebound 14% Over Short Term

AT&T Stock Faces a 14% Decline

Join our 2,934 Daily Subscribers And Get This Commentary In Your E-Mail! Subscribe


[vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”]

Photo credit via Flickr

Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #earnings #sp500 #yields #inflations #rates