“We believe as a short-term trading strategy of buying on dips from end-February to beginning-March targeting a subsequent return-reversal is attractive,” Takada wrote.
This surge comes after a massive sell-off in December that briefly sent the S&P 500 into bear-market territory on an intraday basis.
The recent move up propelled the S&P 500 above its 200-day moving average, a technical level closely watched by investors. Usually, when a stock or an index breaks above its 200-day moving average, it signals strong upside momentum moving forward.
“At this juncture, the SPX has successfully recaptured the 200-day MA after reversing a downtrend off the October highs,” Craig Johnson, chief market technician at PiperJaffray, said in a note. “Further upside from here leaves the 2,800-2,815 range as the next major hurdle for the index to clear.”
The S&P 500 has not closed above 2,800 since Nov. 8 and is currently 0.9 percent from reaching that level. On Friday, the S&P 500 closed at 2,775.60.
“Although the recent price action of S&P 500 has been too volatile to grasp and exact trend, it has returned to the point where these investors are targeting ~2800 again,” Nomura’s Takada said.
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