Another bear has turned bullish.
Gina Martin Adams of Wells Fargo — Wall Street’s biggest bear in 2013 — until recently had a year-end price target for the S&P 500 of 1,850.
In a note to clients on Monday, Martin Adams folded. Sort of.
“We drop our former end-of-year price target of 1,850 for the S&P 500 and introduce a 12-month forward price target of 2,100. Our earnings growth estimates continue to improve given improving domestic economic data and the Fed continues to signal they will tread very carefully in their attempt to unwind accommodative policy… Tactically, we continue to believe that equity investors should be on guard for a more challenging investment climate in the near term, as monetary policy certainty fades to uncertainty this autumn… In sum, we think it wise for investors to remain relatively selective toward stocks in the short term, but buy any policy-related weakness that develops over the next few quarters.”
Adams said the positive outlook for stocks comes from a “fundamental optimism toward equities from an improving economic and earnings backdrop,” though she remains concerned about high stock valuations.
Back in January, Adams said the S&P 500 could trade as high as 2,100 and as low as 1,500 over the next 12 months, saying that 2014 held “chills and thrills” for investors.
And maybe it has, but now, Adams says stocks are going higher.
We’ve recently seen some Wall Street strategists call for S&P 3,000, a far bigger advance than Adams’ call for a roughly 5% advance to S&P 2,100. But last year, Adams stuck with a 1,440 price target for the S&P through the whole year as the index climbed nearly 30% to close at 1,848, so calling for even a modest advance in the S&P is something new from Adams.
On Tuesday, we highlighted commentary from Nomura’s Bob Janjuah — also a noted stock market bear — who said that until the VIX closes below 10, stocks will continue to go higher.
So this makes two noted bears rolling over and turning bullish in just a few days.
Which could mean everything or nothing.