 A rare bullish signal just flashed that says the S&P 500 is set to rocket 20% higher in 2024. The stock market has flashed a rare bullish signal that suggests the S&P 500 is about to soar another 20% next year, according to a Renaissance macro research. The investment research firm pointed out that 71% of firms in the S&P 500 have recently made a new 20-day high. That kind of velocity in the stock gains has only been seen seven times since 1979, and every one of those instances have been followed by a year of strong returns for the stock market, the firm said. In fact, the average returns is over 20%, which would imply a 5,800 price target for the S&P, strategists said in note on Friday. That outlook represents one of the most bullish views on Wall Street heading into 2024. As far-fetched as that may seem, other indicators are suggesting similar moves, and breadth concerns are starting to moderate with the improvement in small and microcap names, strategists added. Some investors have been concerned if the recent rally in stocks can last, given that only a small group of megatech stocks have dominated the S&P 500 all year. But small cap stocks have rallied in recent weeks as investors dial up their expectations for the Fed to slash interest rates next year. That's increased the proportion of winning stocks in the benchmark index, a positive sign for the market. Lower rate expectations have also fueled a recent decline in the dollar, Renaissance macro pointed, with the US dollar index slipping to 102 on Friday, down from a peak of 107 in early January. A weaker dollar is bullish for multinational firms as it can make goods more attractive abroad and lift profits. Markets are warming up to the prospect of a soft landing as interest rates look poised to head lower, inflation cools, and the labor market remains strong. Stocks rallied this week after central bankers suggested 75 basis points of rate cuts could be on the table in 2024, vaulting the Dow Jones industrial average to a new high on Wednesday and Thursday. The Fed's nod to a coming pivot led to a chorus of bullish stock market forecasts on Wall Street. Even prior to this week's Fed fueled rally, Bank of America, Deutsche Bank, and RBC capital markets predicted record highs for the S&P 500 next year. Regarding a target for the market, it's challenging to predict where it will stop. The 5,000 level might sound unbelievable, but given the rapid upward movement in recent weeks, it's a possibility. However, if we approach that level, expect a significant amount of profit taking. Ultimately, selling in this bullish market is not advisable, and the focus should be on finding opportunities to buy. However, it's crucial to be cautious, as the market is showing signs of potential overheating. If you're considering entering the market, be aware that it may not be a safe place to hold on to your investments for an extended period given the current conditions. Because of this dynamic, I am focusing on short-term trades only at this point in time, as the end of the year can be quite difficult to say the least. With this in mind, I think you have to see this as a bullish trend that will be noisy in the next few weeks, but will more likely than not continue into the new year. Thanks for watching. Please don't forget to subscribe for more updates.