Technical strategist shares his view on the S&P 500 index

There’s reason to remain bullish on the U.S. stocks despite the recent bank failures, says Adam Turnquist. He’s the Chief Technical Strategist for LPL Financial.

Here’s what the history tells us

Over 20% of the S&P 500 stocks last week were seen trading at oversold levels. Historically, Turnquist argues, that signals upside over the next twelve months.

When the percentage of oversold S&P 500 stocks crossed above 20%, the forward 12-month average return for the index was 12.2%. This was 2.9% above all S&P 500 12-month returns since 1990.

The recent collapse of the Silicon Valley Bank, followed by Signature Bank, he expects, would be enough for the Federal Reserve to not be as hawkish at its coming meeting as previously expected. A dovish Fed could create more room for the benchmark index to gain further.

Investors should look out for this key level

Turnquist is also constructive since the equities market has now returned back above its 200-day Moving Average.

He agrees that a break below 3,783 (December low) would trigger a bearish signal that could see stocks retest their October lows but said:

Fortunately, most stocks within S&P 500 are still holding above their December lows, including over 80% of consumer discretionary and IT stocks, which collectively represent nearly 40% of the entire index.

Earlier in March, the U.S. Bureau of Labour Statistics said consumer prices last month were up in line with expectations as Invezz reported HERE. The U.S. Fed is scheduled for its next policy meeting tomorrow, March 21^st.