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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