A new record high could be on the way after two signals lit up in the stock market’s favor this week. Ed Clissold, chief U.S. strategist at Ned Davis Research, noted that the S&P 500 experienced a so-called breadth thrust this week. On Monday, more than 90% of the stocks that make up the index rose above their 10-day moving average. This is the second time this month. “The beginning of a big move is often characterized by a breadth thrust, a very high percentage of stocks rising in unison,” Clissold wrote. “The most powerful rallies tend to happen when most stocks participate, because even if a few stocks struggle, others can still lift the popular average.” The S&P 500 surged nearly 1% on Monday, completing its longest streak of eight consecutive trading days of gains since November. On Thursday, the broader market index traded less than 1% below its all-time high recorded in July. .SPX 1M Mountain SPX 1 Month Chart Another sign that stocks may soon rise to new highs comes from the bond market. Clissold noted that the benchmark 10-year Treasury yield fell to its lowest level in more than a year on Wednesday. This came after the release of revised U.S. employment data bolstered expectations of a Fed interest rate cut. “The recent decline in yields was a timely development for equity investors, as it triggered some bullish signals from interest rate indicators and avoided bearish signals in others,” Clissold said. “In addition to the technical backdrop, the possibility of a soft landing, and the gradual acceleration of earnings, lower interest rates are another restraining factor in favor of bulls.” Federal Reserve Chairman Jerome Powell’s speech in Jackson Hole, Wyoming on Friday could shake up the positive mood felt in the market recently.
Stocks this week got two bullish signals as S&P 500 neared records
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