FX Evolution: Wall Street’s Biggest Bear Just Gave Up
Markets move in cycles. From their lows, investors start off skeptical. Many miss out on the early part of a rally. As the rally continues, more and more join in.
Finally, when markets get incredibly bullish, even those who were the biggest bears all the way through the rally give up on their view. Typically, when the last bearish investor is in, the markets are more prone to decline rather than rally substantially further.
This week marked one of the last bearish market analysts, Mike Wilson at Morgan Stanley (MS), throw in the towel. Wilson no longer sees a big market decline, although small pullbacks remain likely.
His previous forecast called for a 15% decline in stocks by year-end. His new target for 5,400 on the S&P 500, is right near current levels.
While that upgrade isn’t the most bullish out there, it is a sign that bearish analysts don’t see any immediate downside to markets.
That overlooks some of the wild swings in the past few months. Those were caused for a variety of reasons. That includes geopolitical events to inflation remaining sticky, and some company earnings.
With investors focused on a bullish outcome for stocks, it may be a good time to take some profits. That’s especially the case with growth stocks that have crushed the market recently.