Stock market outlook: Signals pointing to summer rally, BofA says

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Bullish signals are flashing that suggest the stock market is headed for a 'summer rip', Bank of America says

Signals are flashing that could mean stocks are headed for a"summer rip," according to Bank of America technical strategist Stephen Suttmeier, who suggests investors should buy a potential dip in equities in May before the rally hits in the following months.

"Peaks in this indicator below the overbought threshold of 1.25 spelled trouble for the S&P 500 in March, August and December 2022. A similar pattern in late April sets up ahead of weaker seasonality in May that tends to precede a summer rally," Suttmeier said in a note on Tuesday. "Dow Theory remains on an early 2022 sell-signal, but a December into March bullish divergence and a shift to rising 200-day MAs on both the Dow Transports and Dow Industrials provide green shoots for this technical backdrop indicator that suggest buying a May dip for a summer rip," he added.

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