The S&P 500 could potentially observe a 23% surge if it overcomes a crucial level, as suggested by Bank of America.

Adding to the bullish backdrop, the long-term moving averages of the S&P 500 are ascending. 

“Rising 40-week and 200-week moving averages underpin this bullish longer-term technical setup,” Suttmeier said.

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According to Suttmeier, similar optimistic patterns are appearing in the Nasdaq Composite and other sectors like technology, semiconductors, and homebuilders, suggesting a favorable market situation.

Asset managers may be a key player in this possible surge.

“After institutional asset managers added to net longs in S&P 500 e-mini futures on the FOMO (fear of missing out) summer rally, they curbed their enthusiasm and reduced net longs on the fall dip. This provides asset managers with some buying power for a year-end rally, which tends to be strong in Presidential Cycle Year,” he added.

In addition, retail investors have also accumulated substantial buying power, with cash inflows hitting a record $1.62 trillion this year.

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