The race to 3,300 for the S&P 500


It always gets hard to start predicting the markets move, when you are in record territory and lose those support and resistance levels.

In my opinion, we do have a resistance level, at least for now, of around 2,980. In my view, that’s likely where the S&P 500 may be heading soon.


Onward to 3,300

Deep down, I feel nervous about this rally. Perhaps that’s because the market has risen only 3% since January 26, 2018. Pretty pathetic. Call it a sideways consolidation if you will.

If the S&P 500 fails to advance meaningfully from its current levels, I think people will start calling this a market top.

That will pull in more negative sentiment.



Rally History

However, we have seen this story before in 2011, 2015, and now. Each period of consolidation was about one and a half years long.

The break out in 2011, led to a 56% rally. Meanwhile, the one in 2016 was followed by gains of nearly 40%.

Should we see another break out, we could rise to roughly 3,300. I had been looking for 3,200 but have since revised that higher.

That would be an increase, believe it or not, of just 10%. The index would push higher to a resistance level at the long-term uptrend, which has been in place since April 2012.

Takeaway

From there I would need to re-assess, but calling a 10% in advance in the S&P is not as easy as you’d think.

I talked about it much more in this video. I also got into the dividend yield and multiple expansion tantrum. The Race To S&P 500 3,300 Is On!

Believe it or not even at 3,300, the S&P 500 would be trading at just 18 times my 2020 S&P 500 earnings estimates of $183.18 per share.

Photo Credit: bayassa via Flickr Creative Commons

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Mott Capital Management uses a long-term thematic growth approach to investing in equities. We search for investments that both reflect and help to shape generational and demographic shifts. Mott uses a philosophy of buying these companies for a 3- to 5-year time horizon, with the belief that a long-term holding period gives themes and our chosen companies a chance to fully develop. In our view, the long time horizon also serves to mitigate the risk associated with the short-term impact of market volatility.