The S&P 500 is on the verge of a significant breakout that could lead to new record highs, according to technical research analysts at Bank of America. Should the index push past the pivotal 4,600 mark, it may signal a bullish cup-and-handle pattern, suggesting a potential surge of roughly 23% from current levels.
BofA's analysis points to targets in the low 5,200s, with the possibility of reaching up to around 5,600, surpassing the index's previous peak at approximately 4,819. This optimistic forecast is backed by rising long-term moving averages, not just in the S&P 500 but also in the Nasdaq Composite and key sectors like technology and homebuilders.
The broader market's upward trend is further supported by asset managers who have regained their buying strength. After scaling back their positions following a summer rally fueled by the fear of missing out (FOMO), they appear ready for a year-end rally, a common occurrence in Presidential Cycle Years.
Moreover, retail investors have accumulated a staggering $1.62 trillion in money market assets over the course of this year. This reserve represents a significant amount of dry powder that could be deployed into the stock market, potentially propelling stock prices even higher. With these factors aligning, the market seems primed for a bullish phase if the S&P 500 can successfully breach the crucial resistance level.
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