• New advances in a single technical indicator recommend that the S&P 500 is due for a brand new all-time excessive, Fundstrat’s Tom Lee mentioned.
• The advance/decline line hit an all-time excessive on Friday. The market breadth indicator leads the S&P 500, he mentioned.
• The index opened simply 0.5% from an all-time excessive on Tuesday.
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A technical indicator that measures market breadth is signaling to Fundstrat’s Tom Lee that the S&P 500 will quickly hit new all-time highs.

The benchmark index has been “flat” since April 16, because it touched 4,191 that day and closed on Friday at 4,204. Nevertheless, a technical indicator referred to as the advance decline line gained 1,247 factors throughout the identical time interval, and hit a brand new all-time excessive on Friday.

“Traditionally, the advance/decline line leads the general index,” mentioned Lee in a Tuesday observe.”Thus, surging to new ATH on 5/28/2021 presages the general S&P 500 to advance increased. ”

The advance decline line rises when inventory advances exceed declines and falls when declines exceed advances. In keeping with Lee, it is exhibiting that market internals are marching to new highs.

He additionally defined that the S&P 500 could look weaker than the advance decline line suggests due to mega-cap expertise inventory weak point. Know-how shares are down 4% since April 16.

Lee reiterated Fundstrat’s base case forecast that the S&P 500 will attain 4,400 by “mid-2021,” a roughly 4% achieve from present ranges.

The S&P 500 hit an all-time excessive on Could 7 of 4,238.04. On Tuesday morning, the index opened simply 0.5% shy of that top.