Stock Market Flashes Bullish Signal Suggesting Record Highs This Summer
![](https://investmoneyuk.com/wp-content/uploads/2024/05/65df79acce7f1785b2e4a2cb-780x470.jpeg)
- The stock market just flashed a bullish signal that suggests more upside ahead, according to Bank of America.
- The S&P 500 and NYSE advance-decline lines hit new all-time highs on Friday.
- The bullish breadth signal supports the bull case for a 6% gain in the S&P 500 this summer.
The stock market in recent days has flashed a bullish signal that suggests the S&P 500 will hit record highs this summer, according to Bank of America.
The bank highlighted in a note on Tuesday that both the S&P 500 and the NYSE advance-decline lines registered new all-time highs on Friday.
The advance-decline line helps measure breadth, or participation in the stock market’s gains among individual stocks, by counting the number of stocks that rose or fell in a single day. Technical analysts view it as a leading indicator, meaning that it will often hit new highs or new lows before the broader market.
“New highs for the S&P 500 (SPX) and NYSE Comp (NYA) advance-decline lines provide a potential bullish leading indicator for new highs on the SPX and NYA,” Bank of America technical strategist Stephen Suttmeier said. “This points to solid market breadth and supports for the case for a summer rally in 2024.”
Carson Group market strategist Ryan Detrick shared the same view, arguing in a recent note that the surge in the advance-decline lines is just one more reason to be bullish on stocks.
“To keep it very simple, this isn’t something you see in a bear market and it means this early spring rally likely has legs,” Detrick said.
Detrick highlighted that the mid-cap stock index also reached a new high in its advance-decline line, while the small cap index’s advance-decline line is on the verge of new 52-week highs.
According to Suttmeier, the bullish advance-decline line, combined with a bullish continuation pattern formed in the S&P 500 this month, means that the index is likely to hit record highs this summer.
“The case is for a breakout above 5265 that targets 5560 on a summer rally,” Suttmeier said. That projection represents potential upside of 6% from current levels.
Bank of America
Source link