Investment Strategy

Anthony Scaramucci highlights a bullish stock market signal that suggests the bear market is finally over

Anthony Scaramucci speaking with his hands on stage.

Founder of SkyBridge Anthony Scaramucci, on Crypto Stage during day three of Collision 2022. Eóin Noonan / Contributor

The stock market could be on the verge of ending its bear market for good after the S&P 500 flashed a bullish signal this week, Anthony Scaramucci of SkyBridge Capital said on Wednesday.

That signal is the fact that the S&P 500 has traded above its 200-day moving average for 18 consecutive trading days. As long as the S&P 500 closes above 3,977 on Friday, it will hit 20 consecutive trading sessions above the closely followed technical level.

“The S&P 500 closed today [Wednesday] at 4147.6, above its 200-day moving average for the 18th session in a row… No prior S&P 500 bear market in history has made a new low after making 18 consecutive closes above its 200-day average,” Scaramucci tweeted.

According to a historical data analysis by SentimentTrader, Scaramucci is spot on.

Looking at the S&P 500 since 1950, SentimentTrader applied the following parameters: that the index experienced a more than 20% decline (to represent that it was in a bear market), and that the index then went on to trade above its 200-day moving average for 18 consecutive days.

Of the 11 instances where this scenario has happened, here’s what happened next:

  • The S&P 500 traded higher three, six, and 12 months later 100% of the time, with a median gain of 6.3%, 11.1%, and 19.9%, respectively.
  • The S&P 500 traded higher one and two months later 91% and 82% of the time, respectively.
  • The S&P 500 never went on to make new lows, or even test its bear market low. In other words, the index has, historically, never looked back after such a signal was triggered.

The thee prior times the S&P 500 generated this bullish signal was July 2020, August 2009, and May 2003, all dates that ultimately proved to be a good time to buy stocks.

Of course, this time could be different as investors fear high inflation, rising interest rates, and a potential recession. But history suggests the worst of the weakness seen in the stock market over the past year might be over.

S&P 500

 

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