BofA discusses S&P 500 key levels after massive rally

(Updated – March 12, 2024 10:22 AM EDT)

On Tuesday, BofA highlighted significant levels following recent gains. They said the SPX is showing signs of potential upside depletion, and that the daily and weekly Demarck indicators and Japanese candlestick patterns, and he, indicate risks. Despite these signals, SPX support levels are identified at 4800 and 4600, with resistance at 5200 and 5600.

According to the investment bank, SPX remains on a bullish trajectory, featuring a breakout of a “cup-and-handle” pattern, suggesting a potential rally to 5,200 and even 5,600. Last week, the index approached the 5,200 mark, reaching an all-time high of 5,189.26. . Analysts expect SPX could face challenges near the 5,200 yen level before experiencing a decline that could reverse its bullish trend and set the stage for a push towards the 5,600 yen level. are doing.

Further reinforcing its bullish outlook, BofA said SPX's cumulative net additions have surged from the double bottom pattern formed in October 2022 and October 2023, confirming the strength of the rally. This break in cumulative gains as opposed to declines indicates growing investor confidence and the potential for further growth towards the 2021 highs.

Bullish confirmation was also provided by the advance-decline (AD) lines of SPX and the New York Stock Exchange Composite Index, with both stocks reaching new highs, the company said. This widening of the rally is seen as a buyable push within the current cyclical and secular bull market, as the pullback, if it occurs, will not result from market narrowing. suggests that it is possible.

However, BofA acknowledges that risk factors remain. The most active advancer-decrease line representing the top 15 most active stocks in the US has not confirmed an advance and shows a bearish divergence from the start of the year in 2024. Although this is considered a market risk, new highs for SPX and SPX remain high. The NYSE's AD line, combined with the S&P 500's equal weight and stability in small-cap stocks, suggests that the most active AD line lag is due to a shift away from mega-cap stocks rather than a significant bearish signal in the market. This suggests that it may be possible.

Finally, investor sentiment has become increasingly bullish starting in the second half of 2023. The American Association of Individual Investors Bullish Measure (AAIIBULL) currently stands at 51.7, below its previous high of 57-60. Historically, SPX has peaked after such climactic bullish sentiment levels, suggesting there may still be room for the market to move higher.