The S&P 500 (^GSPC) has gained roughly 18% in the last 6 months, with only a slight pullback in late March to mid-April. Many analysts on Wall Street have raised their year-end targets for the S&P 500.

Fundstrat Global Advisors Managing Director & Global Head of Technical Strategy Mark Newton joins Market Domination to discuss the momentum behind the S&P 500 and the market's overall health.

Newton gives his bullish stance, advising investors: "I think this is a year for risk-taking. I'm very bullish. I think we push up to probably 5400 at a minimum. We can see consolidation I think, in the fall. But now is not a time to be running for cover. If anything, with evidence of treasuries starting to gain some traction and wheels are starting to roll over and the dollar is starting to pull back. That's been great for emerging markets."

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Nicholas Jacobino

Video Transcript

Well, Julie, As you know, the markets are mixed today, with the Dow trading higher.But the S and P 500 NASDAQ, they are a lower here.Where do we go from here?Though?Our next guest says the SPX has started its trek back to late March highs and should exceed this en route to 5400 for more.We're bringing in the one and only.Mark Newton, managing director and global head of technical strategy at Fundstrat Global Advisors.Mark, it's great to have you on set.Thanks, Josh.So we we were talking off camera.Uh, Mark, just about it is interesting.I mean today to see how some of the big, really well loved names like uber getting nailed today.But I, I wanna start kind of broader with you.You look at the SPXS and P 500 when you're looking at the charts.What are the technicals telling you mark about where we're headed near intermediate term here.I think it's important to keep in mind that we've seen an amazing first half of the year thus far with very little overall volatility.Outside of just really three weeks that we saw from late March into mid April.It's been far less volatile, I think, than most years at this time.But it fits right in with the seasonal playbook of election years, which says we do usually get some sort of a 1st 2nd quarter pull back.And then we go literally straight up into the fall before some consolidation ahead of the US election and thereafter we go higher.Uh, I would note that, you know, we've seen a lot of rotation.It started off being technology industrials energy and then that faded.And we saw more movement into materials and literally in the last week, a little bit of evidence of health care bottoming out.And so that's interesting.Uh, to me, this is actually quite healthy.Technology has not deteriorated enough to think that you would avoid it.Um, even though it's been down, you know, really, since late March, that sector has started to stabilise.Stocks like Apple have broken out, which are extremely important to the broader market.So I'm actually pretty encouraged at a time when, you know, sentiment has grown a little bit more negative, Uh, and a couple of evidence of pieces of information that say the economy might be slowly starting to stall a little bit.ISM numbers were lower, uh, jobs, so that's actually taken rates back to the downside.So at this point, it's really bad news is good news for the stock market as rates in the dollar start to move lower.That's a very good sign for for US stocks in the short run and they'll push higher.Yeah, we definitely saw that on Friday with the Jobs report.For example, Um, there was a lot of conversation, really, in the beginning the year about the rally, broadening out right beyond technology and you highlighted in a recent note looking at that S and P Equal Weight Index that we're seeing some positive signs there.And this is, uh, an interpretation of the chart that you were looking at.You know, what's interesting is we've now seen breakouts in the RSP, which is Invesco's equal weighted, and it's still nowhere near, uh, prior highs.But but the fact that it's breaking out, we're seeing now some evidence of small caps and also mid caps, you know, starting to gain traction.I think that's very, very important.Um You know, many are still hyper focused on large cap technology, but it's important to note that the S and P was up 10% in the first quarter, while health care and stocks like Apple, actually were down.And so now those are both starting to stabilise and turn higher.So if we can get that movement in health care, which is the second largest sector within the and P financials, uh, seeing a little bit of boost in technology as rates turn lower and and we see a more of a push back towards growth Uh, that's gonna be very, very good for investors.So I'm I think this is a year for risk taking.I'm very bullish.I think we push up to probably 5400.Uh, at a minimum, uh, we can see consolidation, I think, in the fall.But now is not a time to be running for cover.If anything with evidence of Treasury is starting to gain, some traction and start wheels are starting to roll over, and the dollar is starting to pull back.Uh, that's been great for emerging markets.We've seen areas like transportation coming back, and that's very very good.Uh, a as a leading sector, along with semiconductors.Uh, both of them are very good for the market.You touch on where I wanna go.Semis.You got arm reporting after the bell.Mark, I'm just interested.When you when you look at when you look at the chips, the semis, What do you see?The socks?Uh, it did have a pretty severe pull back over the last few weeks, but we have come back.I mean, we've moved up about 4% or so, at least within just a few days.Time.We've seen nice movement out of NVIDIA.Some of the leading stocks within the semiconductor space.Obviously.Still, stocks like Intel remain laggards, but the majority of the space is still in great shape.It's still my favourite part of technology.So, uh, my thinking is the Sox gets back to 5200.I'm still optimistic that we're going to push higher.Well, and from a fundamental perspective, we still have a potential catalyst coming later this month with NVIDIA earnings on the 22nd.So is that gonna be the thing?Maybe that's gonna help it push up.Uh, I It's already started to push up.I think that will certainly help to the trend to probably accelerate.So I see NVIDIA getting back to its former peaks, which is near 9.75 I think, and above that, it can really push up to right near 1100.So I like and I'm long, NVIDIA.I think it's gonna continue to work.I like to switching gears a bit here, Mark.I'm very interested.You take on oil because we're we're around 79 here.You know, a month ago we were above 85.What do you see ahead?I think oil does have the potential of rallying.We did see a pretty sharp draw down, but in in April for for crude.And now it seems to have hit an area that's technically trend line support.And we're hearing the evidence of now.Saudi Aramco is raising prices to the shipments to the Far East.I think that's a very good sign.Um, it is going to be pressure.Obviously, in the back half of the year, I believe from the administration, the US will continue to pump a lot of crude and evidence to keep crude down to keep inflation down.That's something to be aware of.But right now I don't see any evidence of demand waning as China starts to come back.That that's something that, at least from a perception standpoint, means that that there's going to be demand for crude and and oil should push higher.Uh, they've extended these output cuts, you know, over the next, at least through the second quarter and likely into the third quarter.I think that's really, really going to be good for for crude.Seasonally speaking, we're still in a bullish time.That's gonna change in the back half of the year.For now, I think we have a decent bounce back to the high eighties 90.I think energy can still work, and it's still an overweight for me as a sector interesting up to 90.Not not good news for drivers, I guess, in the US.But, uh, good news for those who are who are long oil.Um, dig into health care a little bit more for me because I know specifically you've been looking at the XB I biotechs.So what are they telling us about what we're gonna see in health care.Health care has been affected by a lot of different factors.I would just say that XB I is a small to micro cap type ETF as part of playing bio biotechnology.So as rates start to pull back, which is my expectation, I think honestly, under 435 in the 10 year could get us down under 4% and even down towards the mid threes, which would be a big it either means economic weakness is coming.But my cycles say that rates are really gonna start to plummet.And that actually is gonna be a source of, uh, a positivity for small caps.XB I being something that should start to recover.Health care is a very seasonally bullish time of the year, which normally is June July.So the the sector has been battered, and now it's starting to show evidence of bottoming stocks like Biogen stocks.Like, uh, you know, Vertex today having a very good day, you know, I think the sector makes a lot of sense for those that wish to be tactical and play for a rally over the next three months.Before I let you go, I got to pick up on one thing.I heard you say there 435 on the 10 year Where?How How far do you think we are from that?When do you think we would fall to that level?Well, we're getting closer.The tenure, Uh, in in Germany, the Bund almost broke down yields.And and I think we're very, very close and and I, I think it happens over the next few weeks.And so you know the evidence that the quarterly refunding, I think, was a tipping point for Treasuries, along with evidence of a little bit of economic weakness, Uh, 4.35 lines up with a couple of different former highs over the last few months.Breaking that structurally would be a negative four yields.Uh, I think we probably get down to 3.5 and which is a big, big move before we turn back higher.But it is gonna prove to be a sign of relief for those trying to refinance for those who are looking to buy homes, you know, the housing sector in general has held up with this unusual sign of the US consumer locking in rates at 3% and then not wanting to refinance.So there's an undersupply of homes that has sort of artificially maybe kept the economy afloat.And US consumers have been insulated from those interest rate hikes specifically given that they're all locked in at low rates.Well, certainly the rates heading lower would provide some relief there.Thanks a lot, Mark.Good to see you.Pleasure.You too.Appreciate it.