S&P 500 to 7000 over the next 60 daysYeT another contrarian idea as so many on the platform publish S&P 500 “short” positions. Just as with the NASDAQ 100 idea, many paper hands were flushed out of the market earlier in the year. Now they wait with cash as the market grinds higher. Others throwing themselves into Put options.
What next? First the basic question trend and support/resistance.
The Trend
Higher lows have been printed consistently since the April sell off. The trend is up.
Support & Resistance
Look left. Multiple levels of past resistance now confirm as support (blue arrows). How is it possible to be bearish?
Sentiment
As with the NASDAQ 100 idea, much of the retail market maintains a short bias with the Put/Call ratio far into the bearish territory. Historically, when put/call ratios spike above extreme levels, the S&P 500 rallies for weeks to months after.
Why 7000?
The breakout above the prior all time high of 6150 sent the market into price discovery. Selling pressure is largely absent with the April flush out leaving Wave 5 to develop. The uptrend channel will now not find resistance until the upper side of the channel, which is conveniently enough the Fibonacci 1.618 extension @ 7k.
Why 60 days?
Specifically this is a timeline defined by the US debt markets, which is for another post.
Conclusion
The S&P 500 climbs a wall of worry as confidence in the US markets evaporates. Loud bearish calls dominate the headlines, which is understandable. However the chart tells the real story: higher lows, confirmed supports, sentiment extremes, and extension forecasts all align with continuation.
A move to 7000 area is very probable, what the market has in store afterwards is perhaps the bigger story, which is for another time.
Is it possible for the market to correct to 6200 and below like many are calling for? Sure.
Is it probable? No.
Ww
