Wall Street is coming into the new week riding high, though further gains from here are far from a sure thing. The S & P 500 on Friday popped 1.5%, its ninth straight gain. That marked the benchmark's longest winning streak since November 2004 .
That advance also erased the index's losses suffered since April 2, when President Donald Trump unveiled tariffs on imported goods into the U.S. Stocks tumbled shortly after the announcement. At one point, the S & P 500 dipped into bear market territory — down more than 20% from a record set in February — but quickly rebounded from those lows. While the sharp turnaround leaves some investors hopeful of another run to all-time highs, the S & P 500 could also run into some trouble near term.
"We have felt the SPX was rangebound with ~5k the lower bound and ~5600 the upper bound. … The nine consecutive daily gains has pushed it to the top end of that range, making risk/reward quite poor in our view," BTIG chief market technician Jonathan Krinsky wrote. "While it's possible there is an overshoot here even up towards the 200 [day moving average] (5745), a 'sell the news' reaction on any actual trade deal would not be surprising to us."
The S & P 500 closed Friday at 5,686.67. .SPX YTD mountain SPX year to date 'Sell in May and go away' Seasonal headwinds could also plague the S & P 500 going forward. Oppenheimer technical strategist Ari Wald noted that, since 1950, the benchmark has averaged just a 1.8% gain between May and October versus a 7% average advance in the November to April period.
"Hence the Wall Street cliché, 'sell in May, and go away,'" Wald wrote. "Trend damage and seasonal headwinds lead us to believe the risk/reward profile becomes less favorable into this resistance. In addition, we'd argue the VIX remains in a bear market range where stocks should be sold at VIX = 20 and bought at VIX = 30."
Lastly, despite some signs of progress on trade, the Trump administration has yet to announce a concrete deal with any country, creating more uncertainty for investors. In fact, Trump on Sunday authorized a 100% levy on movies produced outside of the U.S. Elsewhere Monday on Wall Street, Loop Capital initiated Okta as a buy, calling for more than 20% upside.
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