The recent S&P breakout confirms the next leg of an advance and US equities should be owned, according to Ari Wald, Technical Analyst at Oppenheimer.
Wald says he is encouraged that weekly momentum, as measured by the RSI, is breaking higher and is not yet overbought (see Chart 1). As such, the move higher in the S&P has been confirmed by a move higher in the RSI, something that Wald says tends to occur when trends are set to continue rather than reverse.
Further confirmation from Dow Theory would come from the Dow Jones Transportation Index closing above its April peak at 8109, says Wald (see Chart 2). In the meantime, however, he advises investors to “keep buying dips”.