Don't bet against the bull: Strategas' Verrone

Earnings season is about to ramp up, with nervous investors at odds over what’s next for the market. Whenever the fundamentals are cloudy, pros often look at the technicals to help clear up the picture.

Chris Verrone, Head of Technical Analysis and Partner at Strategas says investors can take a deep breath and relax.

“I’m still inclined to view any weakness as an opportunity. I still think this is a bull market,” said Verrone.

From his proprietary research, Verrone noted that he’s bullish because 70 percent of the S&P 500 (^GSPC) is still in an uptrend. “That compares very favorably to October 2007 when 40% [of the S&P 500] was in an uptrend or March of 2000 when just 25% of the market [was] in an uptrend.”

“Because so many stocks' charts are moving from the lower left to the upper right, I’m comfortable giving the market the benefit of the doubt,” he added, suggesting that weak economic data and other discouraging developments are not a cause for concern.

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Supporting the outlook, Verrone cited the new high in the NYSE advance/decline line, which is a measure of stocks rising versus stocks falling. “That tells me the average stock is doing better than the index.”

Also, Verrone noted that the Russell 2000 (^RUT) has been working higher and he thinks it’s just a matter of time before the optimism surrounding small cap stocks extends to the market broadly.

Therefore Verrone believes the S&P 500 will again achieve new all times highs. “I think it happens several times this year. Yes, I do see us breaking out of the range,” he said. “This is still a bull market.”

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