I say this all the time and now seems like a good time to reiterate the point: The risk of clinging to bearish price targets for equity benchmarks in a melt-up is that by the time you get the shoulder tap, the correction you’ve been wrong about is usually just around the corner.

You know that, of course, which is why you clung to the bearish view in the first place. And that’s what makes the whole endeavor so maddening. You look like a stubborn fool on the way up and then when you finally capitulate and raise your target, the inevitable correction confirms your unwanted (and in some cases undeserved) reputation as a contrarian indicator.

That’s why you shouldn’t be a hero. If you’re a top-down strategist and stocks look like they want to keep running, just raise your target. Everyone knows it’s a charade anyway. No, a forecast that’s marked to market five times a year isn’t really a “forecast,” but also no, nobody’s going to call you out on it. That’s the job.

With that in mind — and with sincere apologies to Chris Harvey because i) he’s good at his job and ii) the point here absolutely isn’t to cast aspersions — Wells Fargo’s Street-high SPX target might’ve rang the bell.

On April 8, Harvey lifted his year-end target by 20% to 5,535. The update was lost in the proverbial shuffle that day, but the accompanying rationale felt, to some, like a begrudging “this time is different” moment.

“In our view, the bull market, AI’s secular growth story and index concentration have shifted investors’ attention away from traditional valuation measures and toward longer-term growth and discounting metrics,” Harvey wrote. “Since the end of 2022, investors’ valuation thresholds seemed to decrease while time horizons increased, a function of this secular optimism.”

As one veteran journalist at a mainstream financial media outlet (not Bloomberg this time) put it to me upon reading those lines, “This is capitulation city.”

Fast forward a few sessions and the S&P was mired in a four-day run of losses, the longest streak in months, and although the pullback still counts as mere blip in the presence of 2024’s otherwise bullish tape, you gotta wonder if it’s the start of something.

We’re ~5% off the highs, which is to say halfway to an official correction.

You can blame geopolitics (i.e., war risk) if you like, but it’s probably more accurate to suggest, as Morgan Stanley’s Mike Wilson did this week, that equities are finally awake to the repricing of the Fed path and rates more generally.

Although bond yields came off the boil on Wednesday — helped along by a solid reception for the 20-year sale — yields are up fairly dramatically from December’s lows. Some 80bps on the 10-year. And market pricing for rate cuts bears almost no resemblance to what it looked like around the time those yield lows on the benchmark note were reached.

This mini-pullback comes just as fund managers shifted the most Overweight equities since January of 2022, before the Fed started hiking.

The chart’s from BofA’s fund manager poll. Some readers may be tired of hearing about the April vintage of the survey by now, but it was a veritable wellspring of notables this month.

Again (and I can’t emphasize this enough), the point isn’t to single out any one strategist, and particularly not Harvey, whose notes I’ve enjoyed more than most over the years, and who I’d hire at my bank any day if I owned one.

The point, rather, is just to say you’re very often better off following the market higher with your target in a momentum rally, absurd as such mark-to-market exercises most assuredly are. Otherwise, you end up ringing the bell.

Harvey did add a caveat or three earlier this month. “We believe systemic risk is on the rise as various incentives (e.g., monetary policy) spur risk and leverage-seeking, but in our view systemic risk is not close to a top,” he wrote, before noting that there are three things that’d change his mind. One was a material widening in IG spreads. The other two: Inflation that rises enough to wipe away Fed easing expectations and a 10-year north of 5%. We aren’t there yet on either score, but we’re closer than we were just a few weeks ago.