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

• Stock market highs will continue through 2025, according to Oppenheimer’s Ari Wald.

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

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

The stock market’s record highs will continue as few signals suggest a peak in stock prices is on the way.

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

“We continue to balance the seasonal winds against our view that the evidence for a major peak is not compelling,” Wald said.

Wald said he was encouraged that the number of New York Stock Exchange stocks above their 200-day moving average is more than 60%, which is a healthy sign for an advance in the market because it shows it’s not just a hand of mega-cap tech companies driving earnings.

“We emphasize that market breadth remains constructive and defensive leadership may represent a ‘catch-up’ from previous underperformers,” Wald said.

Wald said that based on the chart, traders can buy last week’s break to new cycle highs in the S&P 500, with a stop-loss set at 5,650 on a closing basis.

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 a potential downside of only 1%, while Wald’s upside price target of 6,000 in the first half of 2025 represents a potential upside of 5%.

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

“The S&P 500 is up 64% in 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 bull market cycle gain is 102% over a 34-month period.

And if the current bull market follows the path of the average bull market, stocks could continue to rise until the end of 2025, with the S&P 500 climbing to around 7,000.

That 7,000 target aligns with an upbeat prediction by Evercore ISI, which said in June that the AI ​​craze could push stocks higher in 2025.

Beneath the surface of the broad market, Wald said he was encouraged by “correct” management making new highs, including the industrial sector.

“We view the cycle high for industrials as confirmation of an intact bull market,” Wall said.

The story continues

Record highs in the financial sector are another positive sign for the stock market overall, while the tech sector could be gearing up for its next big move, according to Wald.

“Tech hits record highs on both an absolute and relative basis in July. While the sector’s relative trend has moderated, we still believe Technology represents one of the strongest long-term structures in the market,” said Wald.

Finally, Wald highlighted the healthcare sector as another area of ​​the market that is showing resilience, even if it lags other sectors.

While the healthcare sector is hitting new all-time highs, relatively speaking, it is falling to new multi-year lows compared to the S&P 500.

“We think the difference between the absolute and the relative trend in health care is about the size of the market — even the laggard sectors are growing,” Wald said.

Similar scenarios are playing out in the communications services and materials sectors, according to the note.

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