US stocks are taking heart from a series of bull market signs pointing to an upbeat year for Wall Street, as equities post impressive gains despite concerns that the Federal Reserve's monetary policy tightening could lead to a recession. Sits.
US stocks are taking heart from a series of bull market signs pointing to an upbeat year for Wall Street, as equities post impressive gains despite concerns that the Federal Reserve's monetary policy tightening could lead to a recession. Sits.
These include the positive performance of equities in January, the "golden cross" chart pattern on the S&P 500, and more stocks making new highs rather than new lows.
Such signals are far from the only indicators that market participants use to make investment decisions, and they are not foolproof. A weak outlook for corporate heavyweights such as Amazon and Microsoft and a bleak jobs number that raised hopes for Fed hawkishness injected a fresh note of uncertainty into markets on Friday, although the S&P 500 remained up 7.7 percent year-to-date. Is.
However, a steady improvement in gauges of momentum and sentiment in recent weeks reinforced the view among some investors that asset prices may be headed for a more benign period, after last year saw the S&P 500 close to its most since 2008. The biggest annual percentage decline saw a decline of 19.4 percent.
"We think it's a healthy picture that's being painted here," said Ryan Detrick, chief market strategist at The Carson Group, referring to signs such as January's gains and the broad range of sectors participating in the rally.
january jump
The S&P 500 rose 6.2 percent in January on hopes that the Fed would be able to control rising inflation without badly hurting the economy.
When the S&P 500 advanced in January, the market gained 83 percent in the February-December period, with an 11-month average gain of more than 11 percent, according to an analysis of data from World War II by CFRA Research.
However, after a decline year, the increase in January was followed by an increase of 23.1 percent with a 92 percent success rate from February to December.
Despite the recent rally, which has made shares comparatively expensive, "the track record means we probably have some upside potential," said Sam Stovall, chief investment strategist at CFRA Research.
Golden cross
Meanwhile, chart watchers noticed that the S&P 500's 50-day moving average rose above its 200-day moving average on Thursday, a pattern known as a golden cross.
Since 1950, the S&P 500 has produced an average 12-month return of 10.5 percent since the golden cross, according to Adam Turnquist, chief technical strategist at LPL Research, while the average total annual return since 1950 is 9.1 percent.
However, when a golden cross has appeared as the 200-day moving average declines -- as it is now -- the average 12-month return for the S&P 500 jumps to 16.8 percent.
"The recent golden cross adds to growing technical evidence of a trend change for the S&P 500 and further increases the potential for a bear market," Turnquist said in a post.
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