In London Monday, two Goldman Sachs strategists predicted double-digit equities growth in 2011, joining a growing chorus of market optimists. On the other hand, a growing number of technical analysts see market fatigue entering the picture.
Investors should buy growth shares to take advantage of growing economic momentum in the United States, Goldman Sachs strategists David Kostin and Peter Oppenheimer said. They predict the S&P 500 Index may soar as much as another 16% this year after surging 91% since early 2009.
The two strategists forecast robust growth in European stock markets this year as well.
The bullish view gained another adherent Monday as well, when TrimTabs Investment Research revealed that its Demand Index is signaling growth in stock values as the U.S. economy improves.
But there are two sides to every story. Also on Monday, the Wall Street Journal published an article quoting technical analysts who say market patterns indicate that all of the good economic news already has been fueling domestic stock prices and fatigue is likely to set in soon.
They also worry that overly optimistic investors are ignoring genuine threats such as the European debt crisis and rising global interest rates.
“The rally is getting long in the tooth,” said Chris Verrone, head of technical analysis at Strategas Research Partners, who predicts a market correction of 5% to 6% before the market resumes its bull run.