Johnson: Bears Are Wrong - Stocks Will Rally Another 12% Higher From Here

Despite the meltdown in stocks entering 2016 and general fears over another market crash, Piper Jaffray’s Craig Johnson is still uber-bullish.

“We are still looking for 2350 at year-end on the S&P 500…and sticking with our longer-term secular bull market thesis,” he told Financial Sense Newshour on our podcast this Saturday.

With the S&P 500 currently trading around 2100, Johnson's year-end target of 2350 means stocks would not only reach new highs (the S&P peaked in May of 2015 at 2135) but also power another 11-12% higher from current levels.

“This is an environment where we want to be buying the dips and selling the rallies. I've heard some conversation and discussion of selling the rallies as the market moves up—I'm not in that camp. I want to be buying these pullbacks because we think as we look out over a multi-year period of time that this is a secular bull market that, based upon our work, is going to work until you hit a five percent 10-year bond yield...and, let me tell you, that is years away from happening. So this secular bull market, while you will have pullbacks and corrections along the way, is still very much a market where you buy the pullbacks and not sell the rallies.”

Johnson did express some caution in the near-term, especially in light of the Brexit vote coming June 23rd. Once that uncertainty is removed and stocks finally push through last year’s peak at 2135 “I would be adding to positions” on any pullback, he said.

What else does Johnson cite as evidence for his bullishness? Investors, hedge fund managers, and the general investment community are way too pessimistic. Once we break to new highs and it’s clear the correction phase of the market is over, the fear of missing out (FOMO) will send buyers piling back in, he said.

“I would sum it up with a quote from Sir John Templeton: ‘Bull markets are born on pessimism, they grow on skepticism, they mature on optimism, and die in euphoria,’ and I think that's exactly what's happening right now. This kind of fear of missing out—a FOMO rally—is starting to unfold and when this market breaks to new highs above 2135, which we believe is going to happen in coming months and quarters, then investors will have no choice but to set aside their negative corrective viewpoint on the market and start to say, ‘Yes, the corrective phase is done, we are going to start a new leg higher.’”

For a complete archive of our podcast interviews on finance, economics, and the market, visit our Newshour page here or iTunes page here. Subscribe to our weekly premium podcast by clicking here.

About the Author

fswebmaster [at] financialsense [dot] com ()
randomness