Photo: Credit Suisse
Some financial pundits have called the last three and a half years the most hated bull market in history.As evidence, they point to the extremely low trading volumes, which can be interpreted as low confirmation. In other words, people aren’t buying it – figuratively and literally.
However, Credit Suisse’s top equity strategist Andrew Garthwaite thinks low volume may actually be a reason to be more bullish.
“We stay overweight of equities and raise our year-end S&P 500 target to 1,500 from 1,425 – introducing a mid-2013 target of 1,520,” he writes. “We think weak volumes imply a high chance of a sharp move in markets – it could be up!”
Obviously, the sharp move could also be down.
But Garthwaite thinks there are a lot of things that the stock market has going for it: event risk is subsiding in Europe, liquidity is high, valuations are attractive, inflation will rise, and earnings downgrades are stabilizing.
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