Study a chart of the S&P 500, and it will show that stocks are on the brink of a big move higher. That’s according to David Sneddon, Credit Suisse’s global head of technical analysis.
This may not seem apparent now that stocks are going nowhere. After spiking into the new year and entering a correction in February, the S&P 500 is trading in a tight range. The frenetic period when the major indexes hit new highs on an almost daily basis are no more; Monday is the 73rd day since the S&P 500 rose to a new record.
Sneddon says this sideways trading activity is a result of the overbought nature of the market just a few months ago.
“We have consistently maintained the view that the sideways consolidation in the US equity market has been consistent with the construction of a potential large bullish ‘triangle’ continuation pattern,” Sneddon said in a note on Thursday.