S&P 500 could surge above 6,100 after this pattern breakout, BofA says

Investing.com -- The S&P 500 last week broke out from its July-September cup and handle pattern, creating a bullish backdrop for the benchmark equity index.

While late September seasonality can be tricky, strategists at Bank of America believe that maintaining the 5670-5650 to 5615 range would “keep this breakout firmly in place with upside potential to 5930 and 6180.”

This favorable outlook is further supported by rising 50-day and 100-day moving averages (MAs) near 5520 and 5441, respectively, with additional chart support around 5400-5390.

BofA also emphasized last week’s strength of market breadth, as new highs in advance-decline lines signal a bullish indicator for key U.S. equity indices.

This week, strategists point out similarly bullish patterns in cumulative net up volume, noting that this volume "breadth" remains positive for the S&P 500, NYSE Composite , and NASDAQ Composite .

US equities ended last week on a high as the Federal Reserve’s first interest rate cut in years increased investor appetite for risk assets.

All three major indices closed the week on a positive note. The S&P 500 gained 1.36%, marking its fifth weekly advance in the last six and bringing its 2024 rise to nearly 20%. The Dow Jones Industrial Average rose 1.62%, while the Nasdaq climbed 1.49%.

The gains came after the Federal Open Market Committee (FOMC) delivered a larger-than-anticipated rate cut of 50 basis points, marking its first reduction since 2020.

During the press conference, Fed Chair Jerome Powell stressed that the rate cut does not signal any major economic problems and expressed optimism about the outlook.

The Fed’s "dot plot" points to another 50 basis points of cuts by year-end, with an additional 100 basis points expected in 2025, in line with forecasts.

Powell also reaffirmed that future policy decisions will be data-dependent and made on a meeting-by-meeting basis.

Source: Investing.com