The S&P 500 rose to a new cycle high last week, with over 80% of stocks trading above their 200-day moving average, a technical indicator used to gauge the market's overall trend and health.
In addition, the NYSE Advance/Decline Line, which measures the number of advancing stocks versus declining ones, also reached a new record, confirming this strength.
While sectors like Discretionary and Transports showed some weakness, implying it might not be early in the economic cycle, the broad market strength and robust performance of banks, alongside stable credit conditions in the U.S. and Europe, suggest it is not yet late-cycle either, Strategas analysts said in a Monday report.
Looking ahead, the S&P’s breakout points to the 5,550 - 5,600 as the next target range, “supported with a seasonal tailwind into mid-July or so (first support is about 5160),” the broker noted.
Meanwhile, Bitcoin (BTC) has reclaimed its 50-day moving average and appears ready to attack previous highs, signaling strong risk appetite as summer approaches.
On a global level, views on China have evolved, analysts said.
Late last year, the outlook was pessimistic, shifting to a sense of major capitulation in January. By February and March, the expectation was for “a good tactical rally.” Now, the conditions point more and more to “a strategic turn.”
“Time will reveal all, but the big momentum in the China indices is not to be ignored or overlooked,” analysts wrote.
“The general sequence of events in this business is 1) prices moves, 2) a story develops, and 3) flows ultimately follow… we suspect we’re still in phase 1,” they added.