As S&P 500 Tests New Record, Evercore's Ross Raises the Bar

(Bloomberg) -- With a five-week rally pushing U.S. stocks to within a whisker of the record high in January, Evercore ISI’s already-bullish technical analyst is turning even more optimistic.

As S&P 500 Tests New Record, Evercore's Ross Raises the Bar

“The S&P 500 is in a vastly superior technical position to January,” Rich Ross, the firm’s New York-based head of technical analysis, wrote in a research note. He raised his short-term target for the gauge to 2,975 from 2,900. It closed Tuesday at about 2,858, having bounced back more than 10 percent from the low in February.

Ross highlighted key technical indicators supporting his thesis, including:

  • A 14-day relative strength index below the overbought level of 70, which it had far exceeded as the market peaked
  • Sentiment, which was “euphoric” in January, is more cautious today with concerns about China, trade and Facebook
  • An “exhaustive vertical ascent" that capped an “unsustainable (in hindsight) 37% surge” from the 2016 presidential election
    • Now breaking out from bullish six-month “double bottom base of strong support”
  • The market’s survival of the biggest one-day move ever in the VIX, with the biggest short-volatility position on record
  • Smaller percentage of S&P 500 stocks -- 68% -- trading above their 50-day moving average, compared with 84% in January

A gain of as much as 0.5 percent on Tuesday pushed the S&P 500 to as high as 2,863.43, less than 10 points from its Jan. 26 record close. Stocks are rallying as an earnings season in which profits are beating expectations at the highest rate on record and growing optimism in the strength of the U.S. outweigh global trade concerns.

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