The market recovery from last week’s lows could be an indication that a market bottom is in place, according to Fundstrat Global Advisors. “While some might see this as ‘jumping the gun,’ I do feel like there’s a good likelihood that Equity market lows could be in place after the constructive bounce in recent days,” wrote Mark Newton, the firm’s head of technical strategy. Newton pointed to several reasons for this, including: Strong tech returns relative to the S & P 500 . “Insufficient evidence of the broad-based recovery from May 2023 having been derailed.” “Interest rates and US Dollar look to be close to peaking out, and Israeli/Hamas conflict has led interest rates across most of the globe lower as of Monday’s session.” .SPX bar 2023-10-02 S & P tested a key level last week Newton’s comments come after the S & P 500 tested the 4,200 level last week, a key threshold watched by technical strategists due to its proximity to the index’s 200-day moving average and a Fibonacci retracement level. The index hit a low of 4,216 on Oct. 3. It traded around 4,366 on Tuesday. Bank of America’s Stephen Suttmeier also noted that the fourth quarter is usually a good one for the S & P 500, increasing the likelihood of the broader market index doing well going forward. “Seasonality patterns suggest selling July/August and buying back in September/October. 4Q tends to be a solid quarter for the SPX, especially moving into the best 3-month and 6-month periods of the year beginning in November,” Suttmeier noted. Going forward, the next test for the S & P 500 comes near the 4,400 to 4,450 range, as investors work their way through oversold conditions, according to Rob Ginsberg of Wolfe Research. “We want to see true signs of internal accumulation to offset the aggressive distribution signals we experienced into last week’s low,” he said. — CNBC’s Michael Bloom contributed reporting.
