S&P 500 Trading Outlook: Stock Market Top Price Targets

Mark Newton
s&p 500 index trading chart analysis decline tuesday january 7

S&P 500 Index rice Chart INDEXSP: .INX

The S&P 500 had a chance to pullback, but held prior lows from last week before turning up meaningfully Monday

The reversal higher helped the broad stock market index to recoup most of last Friday’s losses. So what’s next?

S&P 500 Trading Outlook (3-5 Days): BULLISH

The stock market’s ability to hold prior lows and push higher throughout the trading session keeps the near-term bullish uptrend intact. A rally through this week to 3275-3305 is likely before a trading top on January 10 / 13 timeframe.

As daily chart shows, this weakness was largely a non-event in terms of causing any real lasting technical damage.

The entire ramping up in geopolitical tension thus far has been largely ignored by Global equities, and we’ve just witnessed an acceleration in Energy and energy stocks, along with a compression in Treasury yields and the US Dollar… but no damage to ongoing uptrends.

Monday’s claw-back should enable the rally to extent back to new highs in the days ahead, but should be watched carefully into end of week, as another 3-4 days of sharp gains should be something to sell into Friday into next week ahead of the potential “Phase 1” signing of the proposed US/China Trade deal.

Stock market breadth was sub-par, but positive with Energy and Healthcare showing the best performance, while Financials, Materials and Industrials all declined. Overall the near-term pullback attempt last week made little to no real impact on the existing uptrend, and yesterday’s snapback is certainly viewed as a positive in the short run.

While the stock indices will likely have to deal with overbought conditions and an above-average chance of further geopolitical tension (We’ll see whether this meaningfully affects sentiment or not), trends have not wavered of late, and continue to look bullish. 

A few key market cycles hit at the end of this week that will be important to monitor, and i’ll describe this in more detail as it grows closer. For now, it’s thought that a rip back to new highs should be something to sell into and should lead to an above average chance of a negative back half of January. For now, it’s right to stick with the trend, and technically I’m expecting a further bounce back to new all-time highs into end of week/early next week. But let price be your guide.

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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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