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What a difference a couple of weeks make.
We’ve been range-bound between the S&P 500 4,300 and 4,600 levels for the better part of the summer, needing a breakout in either direction to tell us where we’re headed for the remainder of the year.
Gun to our head, we were leaning toward a probable breakdown below SPX 4,300 as the most likely scenario rolling into September. But the shallow pullback the past few weeks provided a first clue that this market just doesn’t appear to want lower. And now the strong move higher of the stock market bull run this week says the odds are rapidly improving that the U.S. stock market may be setting up for a breakout to the high side, quite possibly to all-time highs or beyond.
Of course, there’s still work to do. The SPX 4,400 level needs to hold on to the next pullback, which should come next week. But if it does hold that number, folks, and we see a quick march to and through SPX 4,600, we may be off to the races for what could become a euphoric blow-off top and the climax to this one-year bull run.
How high can it go? It’s impossible to place potential levels on blow-off tops, as euphoria and the fear of missing out can do crazy things to people. Nothing would surprise us when common sense flies out the door, and even an Uber driver can throw a dart at a stock board and make money.
But we’re getting way ahead of ourselves. We’ll cool our jets and take it one step at a time. A hold of SPX 4,400 next week is Step 1, then we’ll talk. And if it doesn’t hold, we’re back to the dog days of this summer range. Stand by.
Everyone, have a blessed Labor Day weekend and enjoy some college football with the ones you love.
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