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Market Preview: More Room to Run

NEW YORK ( TheStreet) -- The charts appear to be coming together for the bulls.

Mark Arbeter, chief technical strategist at S&P Capital IQ, made the case in commentary on Friday that the S&P 500 could have another 10%-plus run in store for the second quarter.

"One ultra-bullish interpretation of the S&P 500 based on both the current price structure as well as long-term price action and multiple trendlines shows a potential for the index to climb up to the 1,550 region by the end of the second quarter or early in the third quarter," wrote Arbeter.

"Sometimes, a plethora of trendlines as well as other technical tools seem like they are all drawn to one point in the future, and we believe this is one of those times," he added.

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Arbeter began calling for a pause in stocks in early February when the major U.S. equity indices were up 20%-plus off the October 2011 lows.

Although there was never a dramatic drop, he did document what he termed an "invisible pullback" during March, noting a 6% decline in the Dow transports from late February through early March.

The mild selling at the end of March was also a good sign for Arbeter.

"The major indices are pausing once again and have had a tough time making any progress over the past couple of weeks," he wrote. "A fair amount of smaller indices and sectors have actually made little progress over the past two months. We view these price consolidations as positive, and believe once they run their course, the market will be able to have a rally into May or June before we see the chance for anything major on the downside."

The detail on why the S&P 500 may shoot up to 1550 in the second quarter gets a bit, well, technical, so here's the breakdown from Arbeter.

"First off, the highs from 2000 and 2007 both come in near 1,550, and therefore, represent key long-term chart resistance," he wrote. "Trendline resistance, off the highs in April 2010, February 2011, and April 2011, comes in at 1,550 when projecting out to the June/July period. Trendline support, off the lows in October, November, and December 2011 crosses the above-mentioned trendline at 1,550 in the June/July period."
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