Breakout (Almost) Confirmed

Last week the SPX closed out the week at the highs for the year.  Good sign.  It’s tempting to call this a break-out situation.  And, in the simplest sense of the term, that’s true.  But we want to see some follow-through this week to see if upward momentum will continue and strengthen.  That’s the real test.

While the future is never be certain, this kind of break-out likely means the markets have higher to climb.

In the face of relatively manageable guidance from the FOMC, economic numbers remain solid, and the Fed is apparently going to remain measured and transparent enough to meet the market’s fickle expectations.  So the primary unknown now is trade.

China is the elephant in the room on this one.  It seems Europe, Mexico, and the like are all improving situations.  But China — that’s the interesting one.

As discussed on our forum calls, our belief is that the China trade concerns will resolve themselves in the near future.  But, of course, those are educated guesses.  We’ll see where things ultimately end up.

In the mean time, the all-time high close puts the 2900 mark on the radar for this week, with 3000 as the next line in the sand to pay attention to.  While unlikley, it’s possible the markets could test the 2900 level this week.

The other thing to note is where the markets close this week.  A close below the 2873 level isn’t necessarily a big problem.  But a weekly close below this level would mean the breakout is not yet confirmed.

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