The stock-market rally has driven short interest to a nine-month low and bearish sentiment close to a six-year low, a sign that few investors may be left to propel further gains, Strategas Research Partners said.
Goldman Sachs Group Inc. ’s advance above its average price in the last 200 days and the likelihood that its shares won’t fall to lows bode well for U.S. stocks, said Christopher Verrone at Strategas Research Partners.
U.S. stocks advanced, giving the Standard & Poor’s 500 Index its longest streak of weekly gains since February, amid speculation of an agreement to contain Europe’s debt crisis and further Federal Reserve stimulus.
The Standard & Poor’s 500 Index formed a hammer-shaped candlestick pattern this week, and more than half the stocks in the equity benchmark fell to 20-day lows, technical signals that the market may rebound.
The infrequency of U.S. stocks falling to lows indicates the Standard & Poor’s 500 Index may bottom out after slumping about 2.1 percent from yesterday’s close, according to Strategas Research Partners LLC.