S&P 500 near record high amid “huge amount of froth”

The S&P 500 rose 0.6 percent last week, ending just off a record high.

However, some analysts are warning that the strong run in equities may be close to an end.

“There’s a huge amount of froth in the marketplace right now much like we’ve seen in other important tops of the market that only became obvious in hindsight,” Miller Tabak chief market strategist Matt Maley said on CNBC last Thursday.

Maley cited red flags like “the meme stocks which are flying ... SPACs that are going crazy here ... a stock market that’s very, very expensive, and a market that is overbought”.

Gina Sanchez, chief market strategist at Lido Advisors and CEO of Chantico Global, suggested that investors look out for catalysts that could prompt a downturn.

“The first catalyst I see is just the fact that we have priced in very strong expectations,” Sanchez said. The strong expectations leave room for disappointment.

“The second and more important catalyst I’m looking for is when the liquidity starts to get dialed in and stepped out of the market. When that happens, I think that’s when you could have a real potential correction,” said Sanchez.