Investors cheered the two better-than-expected inflation reports last week, pushing the S&P 500 to 16% above its June 16 low and only 11% below its all-time high. After this rebound, the key question investors are asking is whether this is a bear market rally that will soon fizzle or the start of a new bull market. There’s too much uncertainty to have a high conviction view right now, but we do believe the odds have risen that a new bull market has begun.
To better assess whether a new bull market has begun, we can look at some technical analysis signals that have historically been effective in identifying major market reversals. In sum, the technical conditions of this market appear ripe for the start of a new bull market rather than a retest.
The market became more comfortable with the inflation picture - seeing prices come down - and the likely path of the Fed. Meanwhile, earnings have been quite a bit better than many had feared.
Following the latest rally, the risk-reward for stocks has become more balanced.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All performance referenced is historical and is no guarantee of future results.
All indices are unmanaged and may not be invested into directly.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.