Chartists look at significant push for S&P

Those who like to use charts as a guide to future asset performance - and there are just as many who ridicule the idea - may be keeping a close eye on the S&P 500.

For all the market's recent bond-induced wobble, the Wall Street benchmark by Wednesday's open sat less than 1 per cent shy of its record close.

The first-quarter corporate earnings season has delivered its . . . shall we be kind and say, traditional outperformance of expectations.

And stocks are coping with a pick-up in bond yields because, in historical terms, they remain at very low levels.

Sure, interest-rate sensitive groups like utilities and real estate investment trusts may be struggling but, on the other hand, the steepening yield curve of late is helping lenders.

The rebound in oil has lifted energy stocks, too.

Which leaves the S&P 500 once again bumping up against the top of its recent range, just shy of 2,120.

The action has created a flat-topped pennant, with higher lows beneath. It's a shape that can get technical types betting on a significant spike through the upper resistance should it be decisively broken.

Other technicals may be supportive of such a move. The S&P 500's 14-day relative strength index, a momentum gauge, is about 50, leaving plenty of room for a bounce before conditions become "overbought".

It's perhaps also significant that a similar chart pattern is on show for the US dollar/yen, a currency proxy for investors' risk appetite.

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