Bank of America-Merrill Lynch sees the bulls retaking Wall Street despite the market’s latest losses.

The firm’s chief equity technical strategist, Stephen Suttmeier, believes the record rally is just taking a breather, and he’s using long-term charts of the S&P 500 and technology to build his case.

“It’s actually buy the May dip for a summer rally into July-August,” he told CNBC’s “Futures Now ” on Tuesday.

In his first chart, Suttmeier focuses on the S&P 500 40-week and 200-week moving averages.

“What’s similar to other periods is that we have lows in ’11, lows in ’16 and a low just late last year,” he said. “These lows are similar because they’re cyclical bull market lows within a secular bullish trend.”

Suttmeier points out the latest market drop is being sparked by a macro event: China trade fears. Since a fundamental factor isn’t behind the losses, he believes the downturn is temporary. At its worse, Suttmeier estimates the S&P 500 could fall just below 2,800, a 3% decline from Tuesday’s close.

“We’re going to have a little pause here we think, but eventually we’ll take that high out,” said Suttmeier, who expects the S&P 500 to hit 3,250 within a year or so.

He then expands his bull case to include technology. Looking at an S&P 500 information technology chart, Suttmeier sees the group continuing to power the rally.

“There’s only one tech sector that actually got up to this relative high, and that’s software and services,” said Suttmeier. “If you think about what software and services looked like three or four years ago, there was a rotation into the group, and they rallied sharply.”

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Now, he suggests it’s hardware and semiconductors’ turn to shine.

“Those two groups have room to catch up to software and services,” he added. “Software and services actually did act really well on the pullback in December and remain leadership. So, I think the leadership continues. It’s a secular growth story for technology.”

However, Suttmeier’s optimistic view of the markets includes has a catch.

“There is only one thing bothering me. I’d love to see more 52-week highs,” Suttmeier said. “That’s the only thing out there that I can really point to that’s a little nonconfirmation here.”



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