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BofA's Suttmeier Sees Stronger Longer Term S&P 500 Returns After NYSE 90% Up Day

Stock Markets Jul 22, 2022 08:27AM ET
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© Reuters. BofA's Suttmeier Sees Stronger Longer-term S&P 500 Returns After NYSE 90% Up Day
 
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By Senad Karaahmetovic

Stephen Suttmeier, Bank of America technical research strategist, sees the potential for strong returns in the S&P 500 after NYSE-listed stocks had a 90% up day on Tuesday.

This is a bullish technical signal, Suttmeier reminds clients, with the S&P 500 able to deliver “solid returns” in the following 65 days.

“Looking beyond 65 days, strong SPX performance continued from two quarters to a year after the 90% up day. Forward two-quarter returns show the SPX up 87% of the time with average and median returns just shy of 11%. The SPX is up 85% of the time on an average return of 15.5% (17.6% median) one year after this signal,” Suttmeier wrote in a client note.

The strategist also addressed investor concerns that the S&P 500 can only stage a good really if the trailing P/E is low. Suttmeier doesn’t agree with this notion.

“Historically, the average rally that starts with a P/E of 19 or more is 88.7% over 28 months. The median rally is 105.1% over 22 months. Average and median annualized returns are 22.9% and 24.5%, respectively, which compares well to the annualized returns for rallies that start with a P/E below 10,” the strategist added.

BofA's Suttmeier Sees Stronger Longer Term S&P 500 Returns After NYSE 90% Up Day
 

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