Yardeni Research founder Ed Yardeni believes the S&P 500 (SPX) could face a “consolidation pattern” that stretches through the summer before ending the year at 7,700. Consolidation refers to a period when stocks trade within a relatively narrow range as the market digests prior gains before the next move higher or lower.
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New trading tool for QQQ bulls“I think we’re probably going to get a little choppy — a consolidation pattern, maybe through the summer,” Yardeni told Bloomberg.
S&P 500 Rally Faces Iran-Driven Headwinds
Yardeni accurately called the bottom for the S&P 500 one day after it cemented a low on March 30. Since then, the benchmark index has returned 12%.
However, tensions between the U.S. and Iran could limit the market’s gains after a historic rally. Iran has continued to signal reluctance to engage in peace talks, while the Strait of Hormuz remains at a near standstill, creating an oil supply shock and raising the risk of higher inflation.
Still, Yardeni doesn’t expect the index to retest its March 30 low given a large number of investors sitting on the sidelines ready to buy the dip.