The difference between the perception of the stock market during October 2023, and today, is amazingly stark. At the time, almost everyone believed we were likely heading towards recession, and that the stock market was on its way down in a big way. Fast-forward to today, and GDP is stronger than most believed, consumer spending has been strong, the Fed is considering lowering rates, employment remains strong, and there seems to be further good news across many different sectors (along with the booming expectations based upon AI), with a number of major stocks hitting new all-time highs along with the overall stock markets.
As I noted last week, Bank of America pronounced they foresee a secular bull market that could last through 2033. And, I recently read one article suggesting how investors should be positioned on the long side for the next 40 years. And, former Dallas Fed President Richard Fisher publicly gave the economy an A+ on CNBC this past week.
Yes, indeed. Catastrophe has been averted, and it’s all blue skies from hereon. Or is it?
This actually reminds me of a 3-part series of articles I wrote back in 2022 entitled “What If They Held A Recession and No One Showed Up?” While I did not expect the market to drop as deeply as we did in 2022, we seem to now be heading to the ideal minimum target for this long-term bull market just north of 5000SPX which I outlined years ago.
Yet, I still believe we are potentially heading into a major top in 2024. And, you can read my 3-part series on my views on that matter:
How To know If We Are Heading For A Depression - Part 1
How To know If We Are Heading For A Depression - Part 2
How To know If We Are Heading For A Depression - Final Installment
So, I am going to keep this week’s missive quite short and outline my views for the coming week.
While we did not get the pullback I wanted to see the last time I published a short-term SPX view in a public article, it seems the market may be taking a more direct path to 5000SPX. I want to note that this is not the typical path we would normally see, as standard expectations would have provided us with that pullback I outlined in my last public article on the matter.
So, assuming the market is attempting to push us to the 5000+ region in a more direct fashion, support in the SPX is in the 4800-4835SPX region for the coming week. As long as we remain over that support, my next upside target is the 4955-4997SPX region, with more confluence being presented in the 4955-4960SPX region. When that next rally completes, I am expecting a pullback towards the 4800SPX region again, which, if held, can then point us to the 5000+ region in the coming months, which could then provide us with a major market top and, potentially, a strong reversal.
Alternatively, a break of support at any point in time now before we exceed 5000SPX will open the door for the larger pullback I initially wanted to see, pointing us down towards the 4350-4500SPX region before we make our final attempt at the 5000+ region later this year.
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