The S & P 500 has displayed three key characteristics over the last few weeks, which it will need to replicate for this rally to continue: strong breadth, low two-way volatility, and successful bullish patterns. Strong breadth Tuesday’s trading session couldn’t have gone much better for stock market bulls — as the early positive response to news produced an opening upside gap, which then was bought throughout the day. That resulted in a close near the highs and breadth that surpassed +90%. It was the S & P 500’s fourth 90% breadth day since the April 7 low (vs. two 90% down days over the same period), which is an incredible amount in a short period of time. This is especially true given how far the index now is from the low. Seeing explosive rallies and ultra-strong participation often is evident in response to big downturns (mid-March) and/or at key inflection points (like we saw on April 9 and April 22). But we’re now seven weeks removed from the low, and the S & P 500 is more than 20% above its low point… This is another example of strength begetting strength. The S & P 500’s Cumulative Advance-Decline Line hit a new all-time high all the way back on May 2nd. This shows two key points: The majority of the index’s holdings held up better than it seemed during the waterfall decline. Clusters of +90% days like this can literally shift momentum in a major way. Low two-way volatility The S & P 500 has now logged three 1% gains in May, which is currently tied for the second fewest of 2025 in a month — with January. Of course, that’s a positive… but that’s mostly because it compares to just one 1% loss so far in May. The last time that the S & P 500 had one or fewer 1% declines in a calendar month was November ’24. And let’s not forget just how calm last year was in aggregate. The index had zero or one 1% loss during six of the year’s 12 months, which, of course, equated to a persistent uptrend and an ultimate 23% annual gain. Just a few weeks ago, we were comparing 2025 to 2022, and there were plenty of similarities: for one, the S & P 500 had just witnessed two straight months of at least 10 absolute moves for the first time since September and October ’22. No month had fewer than eight. No matter what happens over the next few days, the S & P 500 will have fewer than eight this May. This doesn’t guarantee anything going forward, but we know one thing: the more months with low amounts of 1% moves, the healthier the market’s trend… and vice versa. Bullish patterns Lastly, but certainly not least, the S & P 500 (and many other indices, ETFs, and stocks) has leveraged bullish chart patterns exceptionally well over the last few weeks. Two weeks ago, our first upside target was hit (5,840). That was a very important development, because it was the first successful bullish pattern since last December. We had three consecutive failed bullish formations since then, which prompted us to be cautious. At the same time, bearish patterns were working… until the first week of April. Having one successful bullish pattern doesn’t predict the future, but it’s often the first step for additional, bigger formations to take shape. And when that happens, the market’s foundation gets stronger. Currently, we have two upside targets in play: 6,125 and 6,555. The higher the target, the greater the need to see future digestive periods resolved to the upside. That’s how our 6,100-target in 2024 got achieved, and that’s how 6,555 (and any other higher targets that get triggered from here) will get acquired, too. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
