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

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.