Can the U.S. stock market rally continue? Analysts: 10 reasons to tell you it can
Some market analysts pointed out that the rebound of US stocks this week is likely to be sustainable.
In terms of market conditions, the S&P 500 and the Nasdaq have fallen for 7 consecutive weeks, and the Dow has even fallen for 8 consecutive weeks. But judging from the current gains, all three major indexes seem to be able to stop their decline this week, with the Dow and S&P 500 both up more than 4%. On the news side, the minutes of the Fed meeting released on Wednesday were in line with market expectations. Beyer investment strategy analyst Ross Mayfield explained that it is a good thing for Fed officials to agree, which means that there is no uncertainty about the direction of policy in the short term.
Since the beginning of this year, the rebound in US stocks like this week has been relatively "short-lived". The S&P 500 briefly rallied above 4,600 in late March, but each subsequent rally has been accompanied by a deeper retracement.
But Frank Cappelleri, chief market technologist at Nomura-owned Instinet, thinks the rally that started this week is likely to continue, citing 10 reasons why:
**1. The S&P 500 closed for the 5th consecutive day**
Thursday marked the fifth straight session for the index to close above the midpoint for the day, which was much better than the late-day sell-off that has been common in recent weeks, Cappelleri said.
**2. The NYSE's "TICK" index hit its highest level in more than a year on Wednesday**
Simply put, the TICK Index = the number of stocks that rose minus the number of stocks that fell on the NYSE. The index touched 1,822 intraday on Wednesday, a level that Cappelleri said typically provides more upside.
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**3. Considering the decline of the S&P 500 this year, there is some support at the current level**
Cappelleri pointed out that as long as the support level is not broken, the S&P 500 is unlikely to see a deeper decline at the moment.
**4. The S&P 500 has a "DeMark Buy Signal"**
Simply put, this indicator shows the market's demand for the underlying asset by comparing the latest high and low prices with previous prices in the same period. Through this comparison, we can assess the trend of the market.
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**5. The S&P 500 is above a key trend line**
Cappelleri claimed that losses earlier this month meant the index could easily dip below 3,950, but the index has bounced back above that level several times recently.
**6. The market is establishing a "bullish pattern"**
Cappelleri said the S&P 500 has jumped above key levels in recent days, a sign that buyers may be returning to the market and will remain in the market.
**7. Fewer ETFs are hitting new lows**
Only nine ETFs hit new lows this week, compared with 24 last week and 96 last week.
**8. High-yield bond prices are rising**
From the perspective of related ETFs, the U.S. high-yield bond ETF-iShares rose 1.52% on Wednesday, the largest gain in two years, and rose nearly 1.4% on Thursday. That means investors have more confidence in companies' credit and less fear of a recession, Cappelleri noted.
**9. The dollar has fallen**
The dollar's steady rise this year is bad news for stocks. However, the dollar has recently fallen from 52-week highs, which is a welcome phenomenon, Cappelleri said.
**10. The S&P 500 has been able to "stabilize its position" in the face of bad news**
On Tuesday, the stock price of social media company snap plummeted 43% due to the lowered performance forecast, and dragged down social media stocks such as Meta Platforms, Google, pinterest, and Twitter, and the market value of the sector evaporated by more than 100 billion US dollars. That also contributed to the day's drop in the S&P 500, according to Cappelleri.
But he also pointed out that the index rebounded quickly afterwards, rising for two straight days on Wednesday and Thursday, which may indicate that the market has digested most concerns about the economy and corporate earnings.
https://www.reddit.com/r/StockMarket/comments/uyxwu4/can_the_us_stock_market_rally_continue_analysts/
