Back on November the 19th, wearing a different hat, I wrote about how it pays to be tactical as a trader.

And with that it mind, I suggested that there was an upside opportunity in US equities, through year end, and into the New Year.

The bullet points from that article are as follows:

Tactical Opportunity: There might be a tactical opportunity in US equity markets despite question marks around AI and Private Credit.

Misplaced Negativity: The recent “doom and gloom” and pullback in US equity markets were seen as misplaced and an overreaction from traders who have short memories of genuine, double-digit corrections (like the one seven months ago, which saw the S&P 500 contract by nearly 20%).

Bearish Long-Term Outlook (Statistical): Historical data (27 years) suggests a bleak long-term statistical outlook for the S&P 500. When bought at a P/E ratio around the current 22.4 (above 5- and 10-year averages), subsequent 10-year returns have always been between +2% and -2%. However a decade is a long time.

Bullish Near-Term Outlook (Analyst View): Wall Street analysts are more bullish, with earnings estimates for US technology stocks rising rapidly. Earnings upgrades for the wider S&P 500 are significantly outweighing downgrades.

Relative Undervaluation: US equities appear relatively undervalued compared to other global markets in 2025, which have seen much higher returns (e.g., South Korea’s KOSPI up almost +80.0%). For US equities, the muted performance is largely driven by forward earnings per share, with PE multiples making only a modest contribution to overall returns.

Conclusion: Given rising S&P 500 earnings (Q3 2025 growth of +13.10% YoY, with +13.90% estimated for 2026) and a less expensive valuation compared to peers, the article concludes that there could be more upside for US equities as the year-end approaches and going into 2026, assuming no new major macro shock.

Three weeks on, and that Idea seems to playing out; with the S&P 500 up by +3.20% since November 19th.
Of course, critics might argue that those gains can be laid at the feet of just a few heavy weight stocks.

Well not so fast because if we look at the performance of the Invesco S&P 500 Equal Weight ETF (RSP) we find that this is up by +4.10% since November 19th.

That tell us that the gains have been widespread and not concentrated among the mega caps.

In the week that I wrote the article, Morgan Stanley raised their S&P 500 target, for end 2027, to 7800- justifying that level with a 22 times multiple on $356.00 of EPS for the index .

The bank said :

“We see 2025 EPS of $272 (12% growth), 2026 EPS of $317 (17% growth), and 2027 EPS of $356 (12% growth). Key drivers of our bullish earnings/cash flow view include a return of positive operating leverage, greater pricing power and AI-driven efficiency gains.”

For now then, I am staying tactically bullish on US stocks.