The current rise in stock prices is more than a bear market rally and could last into September, Fundstrat says

• The current uptrend in stock prices is more than a typical bear market rally, according to Fundstrat.
• The S&P 500 has surged nearly 10% from its June low, and Fundstrat expects the index to touch 4,000 by Friday.
• "This should signify the start of some upward progress for markets into September," Fundstrat said.

The current rise in stock prices is not a typical bear market rally and instead has room to run for a couple months, Fundstrat technical analyst Mark Newton said in a note on Wednesday.

The S&P 500 is up nearly 10% from its June low of around 3,600, and Newton expects the index to test the 4,000 level by the end of this week. On Thursday, the S&P 500 hit a high of 3,987. From there, Newton expects some sideways consolidation before the stock market continues its move higher.

The S&P 500 "is knocking on the door of 4000, and while many indices look to be nearing initial resistance, I remain convinced that this week should not be just a bear market bounce," he said. "This rather should signify the start of some upward progress for markets into September."

A sustained rally in stocks through the start of September would be a welcome sign for investors, as it's been nothing but a steady decline lower since the start of the year, with several rallies in January, March, and May all giving way to more selling pressure.

Adding to Newton's conviction is the fact that overall breadth, or participation among individual stocks, has seen improvement more recently.

"The last few days have represented some of the most broad-based rallies that we've seen in recent months and have helped to add some conviction at a time when many remain skeptical," he said, highlighting that the percentage of S&P 500 stocks that are trading above their 50-day moving average recently broke above multi-month resistance.

Newton expects the S&P 500 to face some resistance just above current levels at around 4,000, with the potential for small declines that could materialize next week during a busy week of high-profile earnings and the Fed's July meeting. But any decline will ultimately represent buying opportunities for those that missed the rally off of the June low, he said.