July 6 (Bloomberg) -- The Standard & Poor’s 500 Index is “very likely” to set a new high for the year as the rally in U.S. stocks continues into late July or early August, according to technical analysts at UBS AG.
“Stay long the U.S. market!” Michael Riesner and Marc Muller in Zurich wrote in a note dated yesterday. “We think it is very likely to see a break of the 1,370 early May reaction high,” they wrote, citing “the very good market breadth, the favorable setup in key sectors and the impulsive structure of the rally.”
The S&P 500 has surged 5.5 percent since June 24 as Greece took action to avoid a default, Nike Inc.’s earnings topped analyst estimates and U.S. manufacturing growth rebounded. All but 17 stocks in the benchmark gauge advanced on July 1 as the measure completed the biggest weekly gain in almost two years. Indexes of transport and consumer discretionary shares climbed to records, the analysts wrote.
If the S&P 500 breaks the May 2 intraday high of 1,370, the next resistance area would be at 1,400 to 1,420, the analysts wrote. That’s more than 4 percent higher than yesterday’s closing level of 1,337.88.
The analysts said they still expect stocks to decline in the first half of 2012 because the U.S. presidential election may help the dollar and hurt riskier assets. A rally this month or early next month is an opportunity to sell shares, UBS said.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.
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