Bull Market Return or Time to Sell? Summary of Traders' Bull and Bear Views
- Core View: The current strong market rebound has sparked intense debate over whether it signals the return of a bull market or is merely a technical bounce. The core disagreement between bulls and bears lies in whether the driving factors are fundamental improvements or sentiment repair, with geopolitical developments (US-Iran negotiations and oil prices) being a key variable influencing the market's future direction.
- Key Elements:
- Bullish Arguments: Strategists believe the easing of geopolitical risks has established a market bottom. Corporate earnings growth (e.g., Q1 expected to increase by 13.2%) and AI contributions (potentially driving 40% of S&P 500 EPS growth) provide fundamental support. Furthermore, the market is in a favorable environment characterized by "low expectations, high delivery."
- Bearish Arguments: Bears point out that market indicators (e.g., cash levels at 4.3%) have not reached the extreme pessimism levels seen at historical bottoms. Surging oil prices (up over 60% since the conflict began) could erode corporate profits. Recent fund flows show net outflows of $15.4 billion from equity funds, while bonds, money markets, and gold have seen significant inflows.
- Core Divergence Point: Bulls view this as a fundamentally-driven sequel to the bull market; bears consider it a technically-driven rebound fueled by sentiment repair and short covering, with underlying issues not fundamentally resolved.
- Key Variable: The progress of US-Iran negotiations and the actual oil tanker traffic through the Strait of Hormuz are decisive factors for the market's future direction. If oil price pressures persist, the S&P 500 could face significant downside risks (e.g., Barclays' worst-case scenario warning of a drop to 5900 points).
Is this a bull market, or just an illusion?
The S&P 500 has rebounded nearly 10% from its March 27 low, and the Nasdaq has posted ten consecutive gains, marking its longest winning streak since 2021. Bitcoin has climbed back above $76,000, and crypto-related stocks have surged across the board. Just as everyone was still debating whether war would drag down the economy, the market has quietly staged a beautiful V-shaped recovery.
This time, has the bull market truly returned, or is it merely a rebound? There is significant divergence among Wall Street's top strategists.
The Bulls: The Bottom is Confirmed
Tom Lee is one of the staunchest bulls in this rebound. In an interview with CNBC, he stated that the US-Iran ceasefire agreement has eliminated the possibility of large-scale bombing campaigns, meaning the "bottom has been established" for US stocks. His logic is straightforward: if the S&P 500 can reclaim its 200-day moving average, the market is highly likely to experience a "decisive upward breakout."
Veteran strategist Ed Yardeni's judgment is more direct. He maintains his view that the S&P 500 bottomed on March 30, with a year-end target of 7700 points, implying an approximate 11% gain from current levels. He told Fortune magazine a thought-provoking line: "Pessimism is now out of fashion." He even admitted that the sheer number of bulls makes him somewhat uneasy.
Now, let's look at Goldman Sachs' assessment.
They characterize the current phase as a "marathon expansion," shifting from large-cap tech stock dominance to a broad rotation into cyclical and industrial stocks. Their year-end target of 7600 points remains unchanged, citing a 12% earnings per share (EPS) growth forming a "fundamental bottom" that can limit downside even amid macroeconomic volatility. In a report on April 7, Peter Oppenheimer, Goldman Sachs' Global Chief Equity Strategist, further stated that US tech stocks may currently present a discount buying opportunity, with AI investment spending expected to contribute about 40% of the S&P 500's EPS growth.
Earnings season is also trending in this direction. FactSet forecasts Q1 earnings growth of 13.2% year-over-year, while Barclays has raised its full-year 2026 EPS forecast to $321. Analysts had previously broadly lowered expectations, and now the classic "low expectations, high delivery" combination has formed, which historically has often served as the ignition for the next wave of gains.
Morgan Stanley's view aligns closely with Goldman Sachs. Morgan Stanley points out that historically, bull markets typically last five to seven years, and a bull market in its fourth year has delivered positive returns every single time in history. They believe the AI-driven productivity revolution has not yet truly diffused beyond large-cap tech stocks, and once this diffusion occurs, it will inject new fuel into the bull market.
The Bears Disagree
But not everyone is celebrating.
Bank of America's Chief Investment Strategist, Michael Hartnett, is the loudest bearish voice in this debate. In the March Global Fund Manager Survey, Hartnett noted that current market positioning indicators are "nowhere near the super-bearish levels seen at recent major lows." He compared four historical bottoms: the April 2025 tariff shock, the Russia-Ukraine war, the COVID crash, and the 2011 US debt downgrade. Each time, market indicators were far more extremely pessimistic than they are now. His conclusion: a true bottom often occurs after true capitulation, and that moment has not yet arrived.
Specific data supports his caution: institutional investors are still 37% overweight stocks; the cash ratio is only 4.3%, well below the 5% buy signal threshold; and market breadth remains positive. At every true historical bottom, these three indicators pointed in the opposite direction.
He also drew a more pessimistic historical comparison: between 2007 and 2008, oil prices rose from $70 to $140, while the subprime mortgage crisis was quietly building beneath the surface. Since the outbreak of the Iran war, oil prices have cumulatively risen over 60%. Hartnett believes this kind of surge inflicts more immediate and deeper damage to corporate profits than the inflation data itself.
Furthermore, different voices have emerged even from within Goldman Sachs' own trading desk. Rich Privorotsky, Head of Goldman Sachs' Delta One business, offers a more cautious judgment: if oil prices remain persistently above pre-war levels, this rally looks more like a technical rebound driven by short covering rather than a trend worth chasing. He says the market's ultimate arbiter is only one thing: the actual tanker traffic flow through the Strait of Hormuz, and this data will take time to verify.
Michael Kantrowitz, Chief Investment Strategist at Piper Sandler, takes an even more extreme stance. He states that the past five years have been marked by extreme uncertainty, making investors very short-sighted, and consensus views can shift with very few triggers. For this reason, he has simply stopped publishing a year-end target for the S&P 500.
Where the Real Divergence Lies
Overall, the bulls believe this is a fundamentally supported sequel to the bull market: corporate earnings are growing, AI-driven productivity gains are real, and the geopolitical risk relief from the ceasefire is unlocking previously suppressed valuation space.
The bears believe this is an emotionally-driven technical rebound: short covering has pushed indices higher, war risks have been temporarily shelved rather than eliminated, and real money hasn't flowed in on a large scale. In the most recent week, bond funds saw inflows of $17 billion, money market funds saw inflows of $10 billion, gold recorded its largest weekly inflow since October 2023, while equity funds experienced net outflows of $15.4 billion.
Furthermore, there is one variable the market cannot ignore: the progress of US-Iran negotiations. The ceasefire deadline is April 22, the second round of talks has yet to reach an agreement, and commercial shipping traffic through the Strait of Hormuz, while improved, remains only a fraction of pre-war levels. Barclays explicitly warns that if the oil price shock persists, the S&P 500 could fall to 5900 points in a worst-case scenario.
We are all waiting for an answer. Trump said it's "close to ending," oil prices fell 4%, and global stock markets opened higher. But "close to ending" is not the same as having ended.
Those inclined to believe in a good outcome must be pleased to see this follow-up scenario: the ceasefire holds, negotiations conclude swiftly, oil prices retreat, earnings exceed expectations, and this rebound will be recorded in history as the new starting point of a bull market. The less optimistic may hold Hartnett's words as the truth: "Investors should not mistake a relief rally for a resolution of the problem."
What do you think?
