Stock Chartists Eying One Key S&P 500 Hurdle Before Record

(Bloomberg) -- The S&P 500’s climb higher faces a test barely 2% from its current level, according to technical analysts.

The 3,337 level, where the gauge closed on Feb. 21 before making a big move lower, was flagged by JPMorgan Chase & Co. and Piper Sandler as a key point for the benchmark as it closes back in on historic highs. Both firms see conditions in place for stocks to continue higher.

“The positive short- to medium-term trend dynamics stay firmly in gear as long as the index holds above the 3,200-3,225 area” as well as above the April-June trend line and the 50-day moving average, JPMorgan technical strategists Jason Hunter and Alix Tepper Floman wrote in a note Wednesday. Above the Feb. 21 close, there’s a resistance area at 3,384, and then the 3,393 February all-time peak, they said.

The S&P 500 is now 46% up from its March 23 low at the height of coronavirus-induced market turmoil. It recently moved back into positive territory for 2020, and gained on Wednesday for a fourth straight day to close at 3,276.

“Broad participation continues to underpin the rally as 35% of stocks on the index closed at new four-week highs” Tuesday, Piper Sandler’s Craig Johnson and Adam Turnquist wrote in a note Wednesday. “Momentum remains bullish, but has yet to reach overbought levels.”

Fewer than 10% of S&P 500 stocks are trading with an overbought 70 or higher relative-strength index reading, they said.

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