S&P 500 Pattern Echoing 2004 Is Bullish Sign: Technical Analysis

The Standard & Poor’s 500 Index will rally back up to “mid-2008 levels,” in part because conditions resemble those at the end of 2004, when shares gained almost three more years, said MKM Partners.

The S&P 500 broke to new highs at the end of 2010, just as in 2004. In both years, the index’s Moving Average Convergence/Divergence line, calculated by subtracting the index’s average level during the past 26 months from the average over the past 12 months, rose above zero and its stochastics chart shows usually strong momentum. The similar pattern suggests the current bull market may have more room to rally, said Katie Stockton, MKM’s chief market technician.