Sam Stovall Sees 1400 S&P500 in 2012

Here is nice headline to take us into the weekend. In case you didn't know, Sam Stovall is the the real deal technician. I know he's always talking earnings multiples and GDP protections, but don't let him fool you - the man knows his Technical Analysis.

He's looking for 1400 on the S&P500 next year, which would take us to those key support & resistance levels from 2007-2008. After breaking support in the early days of 2008, polarity came into the picture turning that 1400 area into major resistance in May of that year:

From AdvisorOne:

Sam Stovall, chief equity strategist at S&P Capital IQ, suggested Friday, with the appropriate caveats, that the S&P 500 may well return in the mid-to-upper teens in 2012. In fact, S&P Capital IQ’s Investment Policy Committee forecasts that the S&P will end 2012 at 1,400, or a 13.5% advance over the Dec. 8, 2011 close of 1,234.

Stovall notes that “history indicates, but does not guarantee, that the S&P 500 return in 2012 will likely be positive,” and goes on to note that since 1900, the median difference in annual price performances for the S&P 500 was 17 percentage points. But using the median 12-month forecasts from each of the Investment Policy Committee members, the group suggests a 15 percentage point change from 2011’s YTD result.

The key factors cited by the committee:

• The S&P 500 is likely to “catch its second wind during the upcoming fourth year of this bull market, but this advance may be tempered by the ineffectiveness of a split Congress.”
• A near 3% projected growth in global real GDP will be paced by gains in emerging economies, “while pressured by a recession in Europe and half-speed (albeit modestly accelerating) recovery in the U.S."
• A recession is expected in the eurozone in the first half of the year, followed by a modest recovery, while Chinese GDP is expected to grow 8.0% to 8.5%.
• S&P 500 operating earnings are projected to grow 8.5%, down from 16% in 2011, paced by cost-cutting, share repurchases and improving revenue growth.
• While the S&P 500 “should advance to the 1,350 to 1,370 region, and possibly 1,400, by the first quarter of 2012,” there could be a 10% to 15% correction in the second and third quarters.
• The recommended asset allocation for a moderate investor would be 45% U.S. equities/15% foreign equities/25% bonds and 15% cash. The suggested allocation to bonds is below S&P’s standard 30% exposure, while the cash allocation is up from its normal 10% recommendation.
• As for sectors, S&P suggests a cyclical bias in which Consumer Discretionary, Consumer Staples and Information Technology is overweighted, while underweighting Financials and Telecommunications Services.

(Stovall will appear on a Dec. 14, 2011 free web seminar sponsored by S&P Capital IQ: ETF Outlook: Equities, Biotech, and Fund Launches, in which he will discuss the equity markets in 2012 and favorable ETF plays.)

Source:

Sam Stovall Sees a 13% Advance in S&P500 for 2012 (AdvisorOne)