A new record may soon be in sight after two signals flashed in the stock market’s favor this week. Ed Clissold, chief U.S. strategist at Ned Davis Research, noted that the S&P 500 experienced what is known as a “broadth thrust” this week, when more than 90% of stocks in the benchmark rose above their 10-day averages on Monday. This was the second time this month. “The start of big moves is often marked by ‘broadth thrusts,’ an extremely high percentage of stocks rising together,” Clissold wrote. “The strongest price increases tend to occur when most stocks follow suit. The logic is that when some stocks get in trouble, others can push mainstream averages higher.” The S&P 500 rose nearly 1% on Monday, ending an eight-day winning streak – the longest since November. On Thursday, the broad-market index was trading less than 1% below a record set in July. .SPX 1M Mountain SPX 1-month chart Another sign that stocks could soon hit a record comes from the bond market. Clissold pointed out that the yield on the 10-year U.S. Treasury note fell to its lowest level in over a year on Wednesday. This came after the release of U.S. jobs data revisions reinforced expectations of lower Fed rates. “The recent yield decline came at the right time for equity investors, as it triggered several bullish signals from interest rate indicators and avoided bearish readings in others,” Clissold said. “In addition to the technical backdrop, likely soft landing and modest earnings acceleration, falling rates are another benefit for bulls.” Federal Reserve Chairman Jerome Powell’s speech in Jackson Hole, Wyoming, on Friday could turn on its head the positive sentiment that has been felt in the market of late.
