BofA says S&P 500 technicals point to corrective Q3

Investing.com -- Bank of America told investors in a note on Wednesday that its third-quarter bias for the S&P 500 remains corrective, outlining a bull/bear debate that will likely be resolved by price action in July.

Analyst Paul Ciana said the S&P 500 uptrend that began in early April turned rangebound in late May, with BofA having advised longs to tighten trailing stops or add put protection on May 27, "a view validated by the subsequent volatility spike and 5% pullback in 1H-June."

Bears point to "an exhausted uptrend, diamond top pattern, corrective wave count, weaker momentum, and defensive Q3 seasonals in year 2 of the U.S. Presidential Cycle."

Ciana said bears contend that an ABC correction is unfolding toward 7,122 and 6,968. Bulls, however, see "a correction-through-time, triangle continuation pattern, and improving breadth supporting a summer rally," noting the percentage of stocks above their 200-day moving averages has risen to 68% and the Advance-Decline Line has reached a new high.

“Our 3Q26 bias remains corrective,” the analyst added.

On U.S. 10-year yields, BofA said a breakout above a declining wedge resistance line signals an uptrend continuation toward 4.65% and possibly 4.82%, with yields needing to hold above 4.45% to keep the setup intact.

On the EURUSD, Ciana said BofA "remains bearish euro and prefers to fade rallies," with a potential bear flag forming and a close below 1.1390 confirming a decline toward 1.1240.

On Brent crude, BofA said an oversold rebound is beginning, with a $65-85 trading range likely developing.

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