S&P 500 hits record close – take the money and run?

After a month of teasing investors, the S&P 500 closed at a new record high on Thursday. Time to take the money and run?

Maybe not, but keep in mind some technical strategists say they expect a pullback of 2% to 3% before the index of large-cap U.S. stocks pushes to higher highs by year-end.

For investors who have ridden even part of the massive upswing since stocks bottomed four years ago, the

threshold can also act as a reminder to do some portfolio spring cleaning. In other words, figure out how much you can afford to lose if this is a peak — and whether you’ve become overly concentrated in one type of investment.

“For most people passing a certain level in and of itself doesn’t cause you to rethink your strategy,” said Erik Davidson, deputy chief investment officer at Wells Fargo Private Bank. “But it is a milestone; it does cause you to stop and evaluate where you are and where you come from.”

The S&P 500 Index closed up 6.34 points, or 0.4%, at 1,569.19 points. In doing so, it took out its past closing record, set in October 2007, of 1,565.15, and caught up with the Dow Jones Industrial Average , which by Thursday had posted 10 record-setting closes since March 5, with the latest closing high of 14,578.54.

For the younger but broader S&P 500, it was a fitful path to a new high. In mid-January, it began trading within 5% of the former all-time high. In March alone, the S&P 500 closed within 1% of its record high without topping it for 12 out of the previous 19 trading sessions.

A new all-time high for the S&P 500 takes on a little more significance than the Dow industrials’s recent rash of record breaking. A lot more money tracks the S&P 500, for a start. With a total S&P 500 market cap of nearly $14 trillion, investors have $2.673 trillion in open-end mutual funds and $186.98 billion in exchange-traded funds linked to the index, according to Morningstar. In contrast, there’s $12.36 billion in Dow-linked funds.

Also to some critics, the 30-component Dow gives a more narrow, even lopsided view of the stock market, since it’s computed by individual share prices rather than market capitalization.

Next up: A shallow retreat

Regardless of the index, new records imply recent gains — and the chance to get out while the going is good.

Since March 2009, when the index reached its lowest level since 1996, the S&P 500 has climbed more than 131%, and is up 10% year-to-date. Large Wall Street firms have grown increasingly bullish, a trend that’s even turned some notable bears.

In mid March both Adam Parker from Morgan Stanley and David Kostin at Goldman Sachs boosted their end-of-year targets to 1,600 and 1,625, respectively. For Parker, the call reversed his formerly bearish target of 1,434. Most recently, Dan Greenhaus at BTIG raised his end-of-year price target to 1,625. Well Fargo Private Bank’s Davidson said the firm may lift its mid-year target for the S&P 500 to 1,600 after the market trounced its earlier target of 1,550.

While he’s bullish for the S&P 500 for the long term, Mark Arbeter, chief technical strategist at S&P Capital IQ, sees too many negative market factors in the current run that appear to be setting up for a pullback.

Those negative factors include the deteriorating percentage of NYSE-traded stocks above their 50-day averages in recent weeks, and more corporate insiders adopting defensive postures. Also, a rosy market sentiment that’s shown the lowest percentage of bears since May 2011 suggests that the market has become too overconfident.

Πηγή: MarketWatch