Are we heading into phase 2 of this rally?

Some thoughts on the

So.

Spring is here, vaccines are aplenty, growth is booming and the S&P just clocked its best 12-month return in history.

Lots of reasons to feel good here.

BUT.

The game is changing.

We're going from a low expectations, high growth environment to a high expectations, (probably) high growth environment.

I mean, look at this.

S&P 500 earnings beat estimates by 10 percentage points or more the last three quarters.

That probably won't happen again with ~16% YOY growth expected for Q1.

High growth is a good thing.

But a high bar for growth could = higher disappointment ahead.

Also, bull markets tend to lose steam in year 2 as they shift out of recovery mode.

Add in the fact that volumes could drop off this summer with everybody and their dang mother getting out of house, and we could see a wandering market over the next few months.

We don't think there's anything nefarious brewing.

It may just be time for everyone to lower their expectations for the market.

And we could be wrong. I mean, this market has some serious momentum to it!

Bottom line? We’re still optimistic on the market, but don’t be shocked if this rally turns a corner and eases off a little.

Nothing nefarious. Just a little breather after a sprint-like recovery.

That’s phase 2.

Anyways, there’s more to life now than being glued to a screen.

And less time devoted to market-watching = more time to have a hot vax summer

Want more of our thoughts on this?

You’re in luck. @justLBell just released her Q2 outlook! https://www.ally.com/do-it-right/trends/stock-market-outlook-april-2021/