Lede

Mark Arbeter, a technical analyst, believes that the ingredients are in place for an explosive U.S. stock-market rally, but the bears may not have been vanquished just yet.

Summary

• The S&P 500 index is moving towards two key resistance levels on the price chart as it rallies off its March 13 intraday low at 3,809.
• A bearish wedge pattern had put the S&P 500 on track for a downside target of 3,656, but it bounced before reaching that point.
• Stocks rallied on Thursday, with the S&P 500 up 1.3% and the Dow Jones Industrial Average up 1.1%.
• The S&P 500 is near a test of resistance around 4,220, which, if taken out, would mark three higher highs and two lower lows off the October bottom.
• The next resistance cluster is in the 4,300 area, which marks the high from August and a 61.8% Fibonacci retracement of the bear market.
• A break above the 4,300 zone could send the bears into hibernation and lead to another round of FOMO.
• However, a consistent move higher that catches many with too much cash and is inhospitable to letting investors waiting for a pullback into the market has not been seen off the October low.
• A long-term technical resolution to a new bull market remains in question.