Market Extra: This stock-market milestone indicates the S&P 500 could be as much as 16% higher one year from today

by | Aug 16, 2022 | Stock Market

More technical indicators are emerging to suggest that the broad-based summer rebound in stocks might be the start of something bigger. Over the past few trading sessions, technical analysts have confronted a number of “market breadth”-related indicators that could portend further gains.

For starters, the number of S&P 500 stocks trading above their 50-day moving averages reached 93% on Friday — the highest level since June 2020, according to Dow Jones Market Data. On Monday, the number of S&P 500 stocks closing above that level was 90.7%. See: Why the U.S. stock rally looks more like a new bull market than a bear bounce to these analysts This is important because in recent decades, once the number of S&P 500 stocks trading above their 50-day moving average topped 90%, the market was almost always higher one year later — usually substantially so. On average, after reaching this market-breadth milestone, the S&P 500 has gone on to gain, on average, more than 16% over the next 12 months. However, near-term returns were somewhat more volatile.

Source: Dow Jones Mar …

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