S&P 500 Reversal Higher Important for One Final Rally Hurrah

The broad stock market stemmed a selloff on Thursday, reversing higher and holding onto gains. In particular, the S&P 500 Index INDEXSP: .INX reversed higher off of price support at 3440 – and it is trading higher again on Friday.

Focusing in on the S&P 500 ETF NYSEARCA: SPY, a move above 349 would likely lead to at least a challenge of all-time highs near 359, and potentially all the way up to 365 before peaking in late October.

Turning our attention to our featured “hourly” chart of the S&P 500 ETF (SPY), we can see that price patterns show progress in pushing up from very important support. Although Friday could see a breakout over 349, there is a chance that the S&P 500 ETF briefly stalls out at that level and pulls back a bit. This action would be perfectly normal and create a bigger chance to buy dips into next week.

s&p 500 etf spy trading reversal higher bullish analysis october 16

Lastly, the advance off of the September low looks incomplete and would be completed by a final push higher into late October (which from a sentiment perspective, would make most investors turn even MORE bullish at precisely the wrong time, thinking Stimulus is coming, and the Federal Reserve is there for investors with low rates while the economy is trying to improve). 

My technicals suggest anything but for the next couple months. Yet for now, it’s right to try to respect the LACK of trend deterioration and specifically the reversal on Thursday and play for upside into next week.

The bottom line is that until/unless we see Thursday’s lows violated, the stock market should push higher into late October.

Twitter:  @MarkNewtonCMT

Author has positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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