Random Thoughts

A highly regarded technical analyst once said that when it comes to equity benchmarks, large round numbers are like rusty doors that require several attempts before finally swinging open.

Such is the case with the 2800 level on the S&P 500, which repelled prior eclipsing attempts, but may have finally succumbed to the most recent thrust.

We think this market strength has further to run as Q1 weakness in both GDP and EPS growth should be reversed in future quarters, with additional strength possibly coming from a final resolution to the U.S./China trade dispute.

We currently project GDP growth of only 1.6% in Q1 followed by a 3.2% rebound in Q2. Additionally, while the first step in an EPS recession is expected to be recorded in Q1 with a near 2% decline in Y/Y operating results, we see the S&P 500 ultimately sidestepping a earnings recession with a 2% increase in Q2 and further advances in subsequent quarters.