The market has had a quiet start to the summer, but the doldrums may be about to give way to some serious fireworks, with new record highs potentially on the way.
So said Stephen Suttmeier, a chief equity technical strategist with Bank of America Merrill Lynch. Last July, Suttmeier identified a “very rare” signal in the markets that he said would bring the S&P 500 Index through 2,400.
This time, he’s calling for the S&P to reach 2,500 or even higher, a 3 percent rally from Friday’s levels. And it’s all going to happen this month, according to the charts.
“We’re right into support right now at around 2,418 to the 2,400 level,” he said last week on CNBC’s “Futures Now.” He added: “I think that if we can hold that, we can see a move towards 2,475 and maybe even 2,500 or 2,550 in July.”
Suttmeier noted the rally should come as no surprise as data going back to 1928 has shown that the markets typically sees an average gain of 1.5 percent in July.
“I would only start to get nervous if the S&P got below 2,400,” he mentioned. “It would probably get quickly oversold somewhere north of 2,500 or 2,550, but I think we’re re-testing the breakout point right here right now. That call into 2,500-plus in July remains intact.”
Despite falling below its 50-day moving average on Thursday, the S&P 500 is still on pace for its 7th straight positive quarter. A big contributor to the market rally in June has been the financials, with the sector having its best month since November.