How High from Here?

Last week managed to finish at all-time highs for the SPX. The question now is how high can we go?

While there is no pre-defined limit, our original 2019 projections had 3100 as a likely target. Given current momentum, the SPX may exceed this level either this week or next.

The question will then shift to whether or not we can hang on from here.

If history were to repeat itself, we’ll likely see a bit of a pull-back coming once this initial target is met. The fourth quarter can be tricky though, as holiday rallies are tough to anticipate.

Given the shift away from a more traditional “Black Friday” sales event, it’s possible the big move for this market is happening right now. It’s typical for holiday schedules and window dressing to make for a dicey December.

2019 has been a remarkable calendar year in terms of market performance. Of course, it was a sand-bagged number as the fourth quarter of 2018 really tanked. The technical set-up does not have a major meltdown manifesting in the data yet though. So we may finish with a pretty strong calendar year from here.

Below is a chart of the 2019 projection. Note that 3110 was at the top of the expected range. This does not mean the markets cannot get into rally mode and push past this. It only means the markets would be ahead of expectations – and perhaps a bit over-bought at that point.

The pull-back targets are of bigger concern for most professional investors. How far back is an expected pull-back? Key levels from here would be: 3024/3014/3000/2974/2944.

To put these numbers in context, it’s about a four-percent pull-back. That’s not exactly huge given the moves this year. (Although it would definitely take some of the fun out of things.)

The good news is the end-of-year low target is still about 3010. That’s pretty solid support for this trend.

We’ll see if the Santa rally pushes us to even higher all-time highs. For this week, look for those numbers to push higher.

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