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.
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.
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!
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