(Bloomberg) -- A Japanese charting technique flagged the first buy signal for the U.S. equity market in six years last week, a sign that the steepest rally since the 1930s may last, Dolmen Stockbrokers said. The Standard & Poor’s 500 Index rose above the top of the so-called Ichimoku Cloud, according to the weekly Ichimoku chart, which analyzes historical highs and lows. The last time this occurred, the benchmark surged 62 percent from June 2003 to a peak of 1,565.15 in October 2007.
There’s “no more cloud cover over the S&P 500,” Cilline Bain, a Dublin-based technical analyst with Dolmen, wrote in a note yesterday. The breakout is “implying a major shift in the long term trend.”
The S&P 500 has rallied 57 percent since a 12-year low in March amid signs the recession is easing. The advance pushed the index’s valuation to 20 times the operating earnings of its companies from the past year, the most expensive since 2004, according to data compiled by Bloomberg. “We do acknowledge that the current pace of ascent is unsustainable, and at some stage there will be a retracement back to cloud support,” Bain said, adding that the index is unlikely to fall below 1,008. It closed at 1,064.66 yesterday.
No comments:
Post a Comment