The Financial Post reports in its Wednesday, May 11, edition that Canaccord Genuity says four recent signals in the United States stock market suggest that the S&P 500 has the potential for 15-per-cent to 20-per-cent upside in the next six to 12 months. The Post's John Shmuel writes that
market breadth, sector reversals, corporate bond surges and stock/bond ratios are all flashing buy signs after the abysmal performance seen during the first two months of the year.
Canaccord analysts Tony Dwyer and Michael Welch say in a note, "The two key market issues early in 2016 -- poor market breadth and spiking corporate bond yields -- have reversed to a degree that suggests they have become major historical buy signals."
The pair note that the S&P 500 has not been down in a year where more than 90 per cent of the market is trading above its respective 50-day moving average, as it is now.
Maintaining conviction in the current market will be tough because stocks are entering a seasonally weak period, while key dates such as the June 2 OPEC meeting and the June 14-15 FOMC meeting have the potential to trigger volatility. Canaccord, however, notes that other factors remain accommodative for stocks.
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