×

US markets are off to a rock-star start this week

If history is an indicator, a real market rally may be brewing.

The market started this week like a rock star. The S&P 500 opening on Monday set an intraday high, fueled by recent positive jobs data in the United States and growing optimism overseas. The Nasdaq and Dow Jones industrial average also posted solid gains at the open.

Analysts at research firm MKM Partners pointed out that in 95 percent of prior instances of the S&P 500 going at least one year without hitting a 52-week high, and subsequently finding a new high after that one-year lag, the benchmark index shot higher over the next 12 months with a median return of 20.8 percent.

"We have been patient over the last few months in anticipating a new high," MKM analysts wrote on Sunday. "Now that we finally have one, history tells us there should be plenty of upside to follow."

Dave Grohl of the Foo Fighters
Francesco Prandoni | Mondadori Portfolio | Getty Images
Dave Grohl of the Foo Fighters

Events in Japan helped bolster market optimism in the United States. The landslide victory of Japanese Prime Minister Shinzo Abe secures an aggressive pro-stimulus leader at the helm of the world's third-largest economy.

But one market bull is looking a little further down the road before getting too bullish. Katie Stockton, BTIG chief technical strategist, told CNBC on Monday morning she's first looking for back-to-back Fridays with S&P market closes above 2,135 before she gets too excited.

"That would convince me that we've broken out," she said. "Then, you can arrive at some impressive upside targets."

All of a sudden, there's some appetite for a little risk back in the marketplace. After seeing the mega returns of early buyers into the IPO of San Francisco-based web services firm Twilio, messaging app Line priced its public offering Monday morning to great fanfare and at the top of its range. Market watchers say other factors, such as rising mutual fund flows, could also provide more capital to put to work in the IPO marketplace.

Of course, not every sector caught a ride on the July S&P express. Analysts have stepped back from investment and consumer bank projections, in part due to the expectation that interest rates will not be raised by the Federal Reserve any time soon.

"U.S. banks will likely experience net interest margin pressure and slower topline revenue growth from the flattening yield curve and expectations for prolonged low interest rates," Fitch Ratings financial services sector analysts wrote in a note Monday morning.