Due to the majority of investors anticipating a golden haired girl scenario in the economy, the stock market has just flashed a reliable buying signal.

According to a global fund manager survey by Bank of America, the stock market has just shown reliable buying signals. This survey, which measures the sentiment of professional investors on Wall Street, shows that respondents' cash allocation has jumped to over 5%. The bank stated that this would trigger a reverse buying signal for stocks, and historically, this would precede future strong gains.

Michael Hartnett of Bank of America said, "Since 2011, the 'buy' signal will bring the S&P 500 Index's return to 2% in two months, 4% in three months, and 7% in six months

The average cash distribution of respondents increased from 4.9% in September to 5.3% in October. In October 2022, the index briefly jumped to over 6%, representing the bottom of the 2022 bear market.

Although increasing cash allocation indicates that investors have become more cautious about stocks, most investors still expect the economy to see a 'blonde girl' scenario.

According to the report, 64% of respondents stated that they expect the global economy to achieve a soft landing or no slowdown at all in the next 12 months. 30% of investors expect a hard landing to take the form of an economic recession, which is more than twice the number.

Other consensus held by respondents include a decrease in interest rates and bond yields over the next 12 months, a resurgence of optimism surrounding China's economic growth, and a sustained decline in future inflation.

Hartnett believes that all this shows that, assuming that the yield of 10-year US treasury bond bonds remains below 5%, the 4200 support level of the S&P 500 index now represents the "fourth quarter hard bottom" of stock prices before the end of the year. The S&P 500 index successfully tested a support level of 4200 points in early October.

The S&P 500 index is about to determine the fate of a bull market.

The S&P 500 index is approaching a critical moment of success or failure, which will determine whether the next stage of the bull market will begin.

The index is sandwiched between two key technical levels: an upward 200 day moving average as a support level and a downward 50 day moving average as a resistance level.

Stephen Suttmeier, a technical analyst at Bank of America, said that the "upward follow-up" in the market is the next step for bulls to further drive the market rebound this year.

Suttmeier stated in a report on Wednesday that "after defending the 4200 low as an important support for the US stock market, the S&P 500 index has rebounded, but the resistance from 4375 to 4407 provides a stubborn tactical obstacle for bulls

On the other hand, Suttmeier is monitoring the range of 4300 to 4335 points as a key area for market tactical support.

The Standard&Poor's 500 Index hit a resistance range high of 4383 points on Monday and then hit a high of 4393 points on Tuesday. It immediately fell and continued to decline. The current trading price of the index is 4333 points.

Suttmeier emphasized that an encouraging sign in the past few days is the improvement in breadth, with stocks on the New York Stock Exchange rising 80% on Monday and 70% on Tuesday.

Market breadth refers to the basic level of participation of securities in the rise of the stock market. In other words, is the stock market rise driven only by a few of the largest companies, or are most S&P 500 index companies also rising in the broader market?

This is an important indicator monitored by technical analysts to better understand the strength behind any specific rebound. Due to the fact that most of this year's gains have been driven by a few large cap stocks, the recent improvement in breadth seen by bulls is an encouraging sign.

Another encouraging sign for bulls is that year-end seasonal factors have always been favorable for stock prices, especially in December.

Since 1928, the S&P 500 index has achieved positive returns 74% of the time in December, with an average monthly return rate of 1.3%. In the third year of the presidential cycle, the return rate in December was more optimistic.

Suttmeier said, "The monthly seasonality of the S&P 500 index indicates weak buying in September and October before rebounding in the fourth quarter and year-end

But if the S&P 500 index trends downwards and decisively falls below the short-term support level of 4300 and the long-term support level of 4200, this bullish pattern may collapse.