JPMorgan sees the S&P 500 hitting 4,800 by the end of 2022 — here is the $100 billion catalyst that it thinks will spark the surge

The Wall Street gorilla recently reiterated its year-end price target of 4,800 for the S&P 500. With the benchmark index currently sitting at roughly 4,100, JPMorgan’s target implies a potential upside of 16%.

The firm notes how lower market volatility can lead to inflows from systematic investors.

“Alongside corporate buybacks, these strategies can provide steady inflows of several billion per day in equities for the next 2-3 months,” writes Marko Kolanovic, chief global markets strategist at JPMorgan, in a note to investors. “Trend following strategies that were largely short equities this year are covering shorts.”

Let’s take a closer look at this call — and where the market guru sees opportunities.

The $100 billion catalyst

Technical indicators could play a critical role in the potential turnaround.

Kolanovic points out that the S&P 500 “is on the cusp of breaking important momentum signals” such as the 200-day moving average.

On stock charts, the 200-day moving average is shown as a line. Traders can use this line to determine whether the trend is up or down and identify potential support or resistance areas.

The S&P 500 has largely traded below its 200-day moving average in recent months. Kolanovic suggests that if the index can break above this 200-day moving average, it could lead to inflows “on the order of ~$100 billion.”

We may have to wait a bit for that to happen. The S&P 500 fell 1.3% on Friday and then tumbled another 2.1% on Monday.

Will the Fed pivot?

To tame spiking inflation, the Fed is raising interest rates aggressively, and that has cast a giant shadow over the stock market.