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March 9, 2026

America October 17, 2022

Despite this Year’s 25% Plunge, the S&P Still Passed a Critical Test, says BofA

America ı By Rochdi Rais

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Bank Of America
Despite this year's 25% decline in the S&P 500, the almost 10-year-old secular bull market remains intact, Bank of America said in a note on Monday. The bank said that the S&P 500 just passed a crucial test after it bounced off of its 200-week moving average. That's a level that has proven to be a "stress test level" for prior cyclical bear markets that occurred during longer-term bull market runs. "The five prior cyclical bear markets of 20% or more during secular bull markets ending in October 1957, June 1962, August 1982, December 1987 and March 2020 saw the S&P 500 test, undercut or spend some time below its rising 200-week moving average," BofA's Stephen Suttmeier said. The surging 200-week moving average also reached the bottom during the S&P 500's December 2018 plunge of just under 20%. The S&P 500's 200-week moving average currently sits at 3,605. However, the index now has a more critical test ahead of itself to confirm that the cyclical bear market will eventually end and make way for a continuation of the current secular bull market, according to the note. "After undercutting the 200-week moving average, regaining the 40-week moving average is critical for the S&P 500 to maintain its secular bull market and avoid a shift into a secular bear market. The failure to reclaim the 40-week moving average after correcting to or below the 200-week MA is a secular bear market pattern," Suttmeier explained. "If the S&P 500 cannot regain its 40-week MA during the best part of the Presidential Cycle, we would view this as a risk to the secular bull market," Suttmeier said. He sees potential for a tactical bearish sell-off to as low as 3,200 if the 3,700 level continues to act as robust resistance for the index. A plunge to that level represents a potential downside of 13% from current levels.    

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Rochdi Rais
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Rochdi Rais

Rochdi Rais is the chief content officer and financial and legal writer at USA Herald. He has been writing about finance, law, cryptocurrency and U.S. politics for years with over +4000 articles published during his career.

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