BofA says this S&P 500 rally could exceed 5400
Based on the movement in January and February, BofA analysts see the S&P 500 pushing above 5400 this year.
The firm explained that a 1.6% rally for the S&P 500 (SPX) in January generated a bullish January Barometer signal for 2024, and with the SPX continuing to rally in February with a 5.2% gain for the month, this «triggers a bullish January-February Barometer for 2024.»
After assessing the data back to 1928, BofA said it suggests that when the SPX is positive year-to-date through February, the year is up 80% of the time on an average return of 13.8%, which would put the S&P 500 at 5420. In addition, the rest of the year (March to December) is up 78% of the time on an average return of 7.8% (SPX 5490).
«When this has happened in Presidential election years, the SPX has been up 10 out of 11 times for both the year and March-December on average returns of 14.1% (SPX 5440) and 8.2% (SPX 5510), respectively,» explained BofA.
Meanwhile, BofA's analysis shows that in years when the SPX has traded higher in both January and February, which is the 2024 scenario, the year is up 89% of the time on an average return of 15.6%, which suggests the SPX will be at 5510. March to December is up 86% of the time on an average return of 7.8% (SPX 5490).
«When this has happened in Presidential election years, the SPX has been up 100% of the time (7 out of 7 times) for both the year and March-December on average returns of 15.9% (SPX 5530) and 9.6% (SPX 5580), respectively,» adds BofA.
Assessing the chart, analysts feel the SPX cup and handle favors upside to 5200 and 5600.
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