Wells Fargo sees upside ahead with 7,500 2026 year-end S&P 500 target, says Scott Wren

Market Overview - The largest options expiration in history indicates that the market size is unprecedented, leading to significant derivatives activity [2] - This event may allow indexes to move away from clustered exposure levels, potentially providing a clearer path for market movement [3] Market Positioning - The market is currently ahead of the midpoint of the year-end target range, suggesting a bullish sentiment [5] - Recent adjustments in sector allocations include reducing exposure in communication services and information technology while increasing investments in financials, utilities, and industrials [6] Retail and Institutional Behavior - Retail investors have been rewarded for buying the dip, contrasting with institutional investors who have been betting against the market [8] - The correlation between Bitcoin and overall market performance has weakened, with Bitcoin not tracking the NASDAQ as it did previously [9] Speculative Activity - Despite a recent 5% pullback, retail buying activity was less aggressive compared to previous downturns, indicating a potential shift in market sentiment [10] - There is still significant activity in speculative investments, with meme stock ETFs rising by 10% and Bitcoin showing a 3% increase [11][12] Options Market Dynamics - Retail participation in options trading is increasing, with a notable rise in assets in leveraged ETFs that bet against the market [12]