For S&P 500 path of least resistance remains higher, says BTIG

Investing.com -- BTIG analysts maintain an optimistic outlook for the S&P 500 heading into 2025, noting that the "path of least resistance remains higher" despite the potential for short-term volatility before year-end.

The analysts attribute this upward trend to seasonal factors and current market dynamics, which show a mix of positive momentum and cautious sentiment signals.

Investor complacency, often a hallmark of this time of year, is said to be evident, with put/call ratios near multi-year lows and NAAIM exposure reaching multi-year highs.

Meanwhile, consumer confidence in equities has also hit a record, bolstering the market's steady ascent. However, BTIG cautions that if these indicators persist into January, they could become a contrarian warning signal.

Technology's relative trend continues to be questionable, according to the firm.

While a tactical bounce in tech stocks is anticipated in December, they believe the key question for 2025 is whether there will be a "more meaningful rotation out of tech."

BTIG says such a shift could favor broader market participation, potentially benefiting small-cap stocks relative to their large-cap tech counterparts.

Healthcare emerges as a potential beneficiary of this rotation. Analysts suggest a "double bottom" in healthcare's relative performance against tech, signaling the sector could gain traction in the months ahead.

Conversely, financials, which have shown strong momentum and relative strength, may need a breather, as they are now "as stretched above their 200 DMA (18%) as they have been in the last decade."

BTIG also highlights European equities, pointing to Germany's breakout and the possibility of broader participation from European markets, reminiscent of their performance uptick in late 2016.

Source: Investing.com