By Victor Reklaitis, MarketWatch
20thCentFox/Courtesy Everett Collection
Think again if you’re condemning the recent upbeat action by U.S. stocks, suggests Jonathan Krinsky at MKM Partners.
He has turned to the legal system to make his point.
“In the American criminal justice system, the prosecution must prove, beyond a reasonable doubt, each essential element of the crime charged,” the chief market technician wrote in a note dated Sunday.
Meanwhile, in financial markets, “price is the final arbiter,” and stock prices are looking good, Krinsky said. He has focused on a broad stock-market gauge — the Russell 3000 /zigman2/quotes/210598149/delayed RUA -1.94% /zigman2/quotes/208731962/composite IWV -1.97% — rather than a big-cap benchmark like the S&P 500 /zigman2/quotes/210599714/realtime SPX -1.89% or Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.30% .
“The Russell 3k, which represents 98% of investable U.S. equities, is at an all-time high,” Krinsky said.
The index also has climbed above its rising 20-, 50- and 200-day moving averages, he noted. Those are chart levels that technical analysts often watch closely. What’s more, 73% of the Russell 3000’s components have clambered above their 200-day moving averages, Krinsky added.
Here’s his closing argument: “While we acknowledge concerns about seasonality, sentiment and interest rates, we would argue that the bull case remains innocent until proven guilty.”
Krinsky is hardly the only technical analyst who is sounding optimistic. Technicians aren’t necessarily that frustrated about U.S. stocks showing flattish action lately .
“From a longer-term perspective, the consolidation looks like a healthy pause following an upside breakout,” said Willie Delwiche, a Baird investment strategist, in a post at See It Market .
“Momentum continues to improve, suggesting the path of least resistance remains higher over the intermediate term,” Delwiche added.
Over at Goldman Sachs /zigman2/quotes/209237603/composite GS -1.20% , however, analysts are less upbeat on the stock market. Its strategists just cut their rating on global stocks to “underweight” over a three-month horizon, citing pricey valuations and poor earnings growth.