16.03.202115:03 Forex Analysis & Reviews: Economists foresee collapse in US stock market

On Monday, S&P 500 closed at its all-time high.

Experts at Deutsche Bank think that a large number of all-time highs, which S&P 500 has touched since the beginning of the year, signals about a formation of a cycle peak.

Curiously, during the three months of the year, S&P 500 has reached its record highs more than 12 times. It is 58 all-time highs on a yearly basis. It is the fourth best performance in the whole history of stock markets.

Traditionally, such a big number of records was logged near the peak of market cycles. Such a phenomenon took place in the 20s, 60s, and 90s of the previous century.

However, at the moment, the main difference is that the stock market has not reached its peak yet. This could be proved by a rising number of securities traded on the New York Stock Exchange. Most of them have hit their 52-week highs.

Today, this indicator is at the level of 21% last seen at the end of 2016.

At the same time, market participants are trying to sell off stocks of the recent leaders in order to buy securities of less popular companies. Experts suppose that this tendency may not lead to the formation of a risky peak. This could simply be rotation from one securities type to another.

There are some other factors against the collapse in the US stock market. Thus, the adoption of the $1.9 trillion stimulus package and a significant rise in the US GDP in 2021 are among these factors.

Earlier, experts at the Bank of America were sure that the market would reverse in the near future. However, the Sell-Side Indicator, which is calculated by analysts at the last day of every month, provides economists with the most reliable information. According to the data received in February, analysts recommend traders opening buy positions. Usually, this points to a reverse.

Last time when the Sell-Side Indicator was close to the sell level was in summer 2007. Notably, in 2008, market profitability dropped by 13%. The currentreading of the indicator signals about an inevitable decline in the market profitability in 2022.

Today's optimistic mood could be explained by a large volume of investments in the ETF stocks made in February. It is obvious that investors hope that the recent stimulus package and vaccination programs will boost quotes in the future.