S&P 500 has up to 20% upside this year — but don’t buy just yet, strategist says

The S&P 500 could advance by 10-20% this year, but investors should hold off on buying for the next few weeks, according to Chris Watling, the CEO of independent financial research firm Longview Economics. In a note published this week, Longview said its current market timing models are close to “sell” for the U.S. index, since risk appetite has become “greedy” and markets are “complacently priced.”

U.S. stocks jumped to record highs on Thursday as tensions between Iran and the U.S. cooled, with the S&P 500 closing 0.7% higher at 3,274.70. The index has surged 26.68% over the last twelve months. Watling recommended remaining “neutral” while high levels of risk appetite and sell signals unwind.

The latest AAII Sentiment Survey published on Thursday placed pessimism among individual investors at a six-week high. Bullish sentiment for the next six months is seen falling 4.1 percentage points to 33.1% versus a historical average of 38.0%. Bearish sentiment, or expectations that will stocks will fall over the next six months, jumped 8.0 percentage points to 29.9%.