A market top is 'at least 6-12 months away': Oppenheimer

Investing.com -- Oppenheimer analysts said in a note Monday that the current bull market is likely to extend into 2025, with a market top "at least 6-12 months away."

In their latest research note, the firm argues that while signs of market fatigue are emerging, leadership in high-momentum stocks should continue to drive gains in the months ahead.

"Our work shows leadership should continue to be bought and lagging stocks should be sold during the later stages of a bull cycle," Oppenheimer wrote.

They stressed that this phase of the market cycle often rewards high-momentum stocks, even as the broader market shows signs of strain.

Oppenheimer introduced the concept of the "As Good As It Gets" moment, which they describe as the point when market breadth reaches its widest extent, and even underperforming stocks enjoy temporary gains.

"Generally speaking, the 'As Good As It Gets' moment is when internal breadth is broadest and poor selection has been rewarded," the note explained.

Importantly, they believe this moment typically occurs 6-12 months before the market reaches its final peak.

To assess market conditions, Oppenheimer highlighted their proprietary "Sector Culprit Indicator," which tracks the performance of the S&P 500 's weakest sector.

Currently, the indicator is said to reflect a 12% year-over-year gain in the Energy sector, signaling that the market is not yet near a top.

"A sector culprit (-20% y/y) is one of our market-top signals," they stated, suggesting that further gains are likely before the bull market concludes.

For investors, Oppenheimer recommends focusing on high-momentum stocks in the coming months. "High-momentum should continue to outperform vs. low-momentum, regardless," they emphasized while cautioning against holding low-momentum names as the market advances toward its eventual peak.

Source: Investing.com