Bank of America technical strategist Paul Ciana sees more gains for the S&P 500 in the first quarter, citing improving market breadth and sector rotation. In a recent client note, Ciana pointed to an uptrend continuation pattern favoring a rally toward 7,168 and 7,206. His medium-term targets reach 7,430, with a potential 'frothy' peak near 7,741.

Ciana cautioned that this upside depends on continued strength from mid-caps, small-caps, and transports. He noted the Dow Theory is turning bullish as transportation stocks break out. However, he warned that the presidential cycle's second year often underperforms in H1, making the near-term path potentially uneven.

BofA also flagged a potential market peak in 2026 before a corrective phase. For now, the bank sees a secular bull market continuing, with capital rotating out of technology and into materials, industrials, and financials.