Unforeseen Bull Stampede: Analysts Face a Short Squeeze

Despite the risks of recession, high inflation, and tight monetary policy, the market has surpassed expectations for the S&P 500's year-end performance, leaving strategists who made those estimates with a dilemma. It's literally almost a strategist short squeeze.

Mike Wilson, who rose to fame after accurately forecasting the plunge in the S&P 500 last year, has failed to repeat his success in 2023. Mike Wilson admitted on Monday that he held onto pessimism for too long, despite a market rebound that almost erased last year's decline.“We were wrong,”Wilson wrote in a note to clients Monday.“2023 has been a story of higher valuations than we expected amid falling inflation and cost cutting.”

Majority of Wall Street firms have revised upwards their estimates for 2023. Here is the table tracking these estimate changes.

Bank of America's Michael Hartnett wrote in the bank's weekly report on investment flows across asset classes that the present market resembles the situations in 2000 and 2008, characterized by a"significant rally before a major collapse."