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S&P 500 Strikes a New All-Time High

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The S&P 500 index (SPX) strikes the 3,000 points for the first time in its history. The American index this year accumulates an advance of 19.36% (YTD). In this post, we will review what to expect in the coming weeks of the leading American index.



SPX strikes the 3,000 pts

During the Wednesday trading session, the S&P 500 reached 3,000 pts for the first time in its history. The Technology sector and Basic Materials led the SPX advance. The best performers in the Technologic sector was Google (GOOGL) advancing 1.06%, Amazon (AMZN) 1.57%, Apple (AAPL) 1.05%. In the Basic Materials highlighted, Chevron (CVX) led the rises climbing 1.63%, followed by Exxon Mobil (XOM) with 1.35%. However, the financial sector did not enjoy the same euphoria during the trading session, Wells Fargo (WFC) dropped 1.57%, Bank of America (BAC) eased 1.29%.

 

There still is more upward potential

The 4-hour chart of the S & P 500 shows an ascending channel, which shows us that there is still potential to more upside. The potential bullish move targets the area between 3,051.9 and 3,102.3 pts. The climbing scenario would be invalidated if the price closes below the 2,865 pts.


 

Will this time be different?

Despite the bullish scenario from SPX, we should consider the warning signs facing the bull market euphoria context. In the first chart, we observe US Treasuries yield spread between the 3-month and 10-year. The spread is at its highest level since 2007, before the subprime crisis. Additionally, the current zone takes more relevance because it’s repeated in the year 2000, previous to the dot com bubble.


In the following daily chart, we see the comparison between the SPX index, the Put/Call ratio, and the VIX volatility index. Both the put/call ratio and the VIX index do not show warning signs that could lead us to think of an immediate turn of the market. For this to happen, the put/call ratio should decrease from 0.75 pts. The VIX should show a bullish breakout, or drop from the 10 pts, which would represent a sign of extreme euphoria.


Remember that the price is not forced to move as our outlook proposes. The charts released corresponds to an educational application of the Elliott Wave Theory. Comments issued don’t represent an investment recommendation. Finally, consider that the comparison with other assets or indicators represents a point of view to support the main analysis.

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