Why stocks have much more room to rise before they peak, according to a technical analyst

• According to Oppenheimer’s Ari Wald, the stock market is expected to reach high levels through 2025.

• In a note, Wald highlighted strong market breadth and healthy signals across sectors.

• Key sectors such as industrials, finance and technology appear resilient, Wald said.

The stock market is expected to continue to hit record highs as there are few signs that the peak in stock prices is near.

That’s according to Ari Wald, managing director and technical analyst at Oppenheimer, who said in a note over the weekend that there are positive “inflection points” in the underlying market.

“We continue to weigh the seasonal headwinds against our view that there is no compelling evidence for a major peak,” Wald said.

Wald said he’s encouraged that the number of shares on the New York Stock Exchange is above its 200-day moving average, above 60%. That’s a healthy sign for market gains because it shows it’s not just a handful of mega-cap tech companies driving gains.

“We emphasize that market breadth remains constructive and defensive leadership can help catch up from previous setbacks,” Wald said.

Wald says traders can use the chart to buy last week’s breakout to new cycle highs in the S&P 500, with a stop-loss at the 5,650 level at the close.

A stop-loss is a risk management tool used by traders to automatically sell a security when a certain price is reached.

For the S&P 500, the 5,650 level represents only a 1% potential downside, while Wald’s upside price target of 6,000 in the first half of 2025 represents a potential 5% upside.

Wald’s 6,000 price target for the S&P 500 is based on the median bull market cycle.

“The S&P 500 is up 64% over the 23 months between October 2022 and September 2024. Since 1932, the median bull cycle is up 73% over a 32-month period,” Wald said.

Meanwhile, the average gain during a bull market cycle is 102% over a 34-month period.

And if the current bull market follows the path of the average bull market, stock prices could continue to rise through the end of 2025, with the S&P 500 rising to levels around 7,000.

That 7,000 target matches a bullish forecast from Evercore ISI, which said in June that the AI ​​craze could send stock prices soaring through 2025.

Wald said he is encouraged beneath the surface of the broad market that the “right” leadership is reaching new highs, including the industrials sector.

“We view the cyclical peak for industrial stocks as confirmation of an intact bull market,” Wall said.

The story continues

According to Wald, record highs in the financial sector are another positive sign for the broader stock market, while the technology sector may be preparing for the next big rally.

“Technology came off an absolute and relative high in July. While the sector’s relative trend has moderated, we still believe that technology represents one of the strongest long-term structures in the market,” Wald said.

Finally, Wald emphasized that the healthcare sector is also a resilient market segment, even though it lags behind other sectors.

While the healthcare sector is hitting new record highs, it is falling to new multiyear lows relative to the S&P 500.

“We believe the divergence between the absolute and relative trends in healthcare is indicative of the breadth of the market. Even lagging sectors are recovering,” Wald said.

Similar scenarios are playing out in the communications services and materials sectors, the report said.

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