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.