There’s a ‘very good chance’ of a breakout for the S&P 500, technical analyst says

There’s a “very good chance” the S & P 500 is ready to rally after its close above 4,600 last week, one technical strategist said. The S & P 500 closed at 4,604.37 on Friday, above the technical resistance at 4,595, according to Katie Stockton, founder and managing partner at Fairlead Strategies. But she said investors will have to wait for two decisive closes above a key resistance level before calling a breakout in stocks. In fact, stocks may consolidate a bit this week, which Stockton called “very natural, normal price action” for equities. She expects yields could tick higher, and the U.S. dollar could rise against the yen. “So, not convinced we’ll get that breakout necessarily here this week, but we do ultimately think there’s a very good chance of it, and that would be a bullish long-term development,” Stockton told CNBC’s “Squawk Box” on Monday. For yields, she expects the bias is toward the downside, with the next level for the 10-year Treasury yield at about 3.93%, while the upside resistance is at 4.55%. The 10-year Treasury yield was last at 4.27%. At the same time, Stockton moved financials to an overweight recommendation last week, saying banks are showing some promise after their decline this year. “Financials having such a huge footprint in the S & P 500, if they participate and lead even on the upside, well that’s what could get the market out of this big wide long-term trading range,” Stockton said.