To some technical analysts, breaking through that 200-day moving average paves the way for bigger gains ahead. In December alone, the S&P 500 was down 9 percent, making it the worst December for the index since 1931.
“We have become very defensive over the course of last couple of week or so,” said Petra Bakosova, chief operating officer at Hull Tactical. “We’re getting back to the point where we’re seeing the market becoming overvalued.” She added the December sell-off was an “opportunity” for investors if brought valuations to more “reasonable” levels.
An early sign of bullishness came last Friday after the S&P 500 broke past the 2,700 level. Other technical analysts are seeing positive signs of more upside to come despite any pullbacks that may come.
“You could get a pull back to 2,550 to 2,600, and that may be all you need,” said Strategas Research technical analyst Todd Sohn. “I do like what I’m seeing. It’s important to remember the S&P is up 17 percent over 32 trading days. It’s a really good run, and I don’t want to stand in front of it, but at some point, it’s going to need to pause for more than two or three days.”
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