S&P 500 primed for a breakout

Price at time of writing – 1885.

In an attempt to confirm the more bullish signals emanating from the Dow Jones, this week I also update the chart of the S&P 500, a broader and perhaps more reflective US share index.

In past updates I set a long-term target on the S&P 500 at 1791. Even this once-ambitious target proved conservative, however, with the index recently trading around isolated resistance at 1882. Furthermore, it shows no sign of intimidation at these higher levels. This pattern of sideways trading around resistance is usually a precursor to a fresh breakout, after a period of necessary consolidation. The resistance at 1882 is modest too, representing an 8.33% rise from its most recent minor low. A clean break above 1882 will allow me to double that advance to one of 16.66% aligning the index with other, more potent, percentages.

With the S&P 500 closing yesterday at a level just above 1882, we may be very close in breaking to a new and higher trading range. Any momentum that develops now will take the index directly to 2000, with a likely overshoot up to 2058. Generally, the S&P 500 chart mirrors the more positive signals of the Dow, and confirms my view that US shares are primed to move higher.

Recommendation: buy. Target 2000. Stop-losses can be set to trigger on weakness below 1850.

S&P 500 chart

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