- The forefather market just broke above a key resistance level after the S&P 500 jumped above 4,200 last week.
- For the snap out of it to continue, Fairlead Strategies’ Katie Stockton outlined the technical factors that need to occur.
- Here’s what destitutions to happen for the stock market to solidify its current rally and continue to higher, according to Stockton.
The stock market’s up to date breakout above a key resistance level is poised to continue if the S&P 500 and Nasdaq 100 can hold above two key resistance squares by the end of this week, according to a Monday note from Fairlead Strategies’ founder Katie Stockton.
With the S&P 500 cease operation above 4,155 last week and jumping above 4,200 for the first time since August 2022, investors are now praying if the rally can continue even amid threats of a debt ceiling showdown in Congress continue to linger.
According to Stockton, short-term impulse indicators are turning in favor of stocks following the recent breakouts, and they’ll strengthen even further if the S&P 500 and the Nasdaq 100 tight above 4,155 and 13,525 at the end of this week, according to Stockton, essentially confirming the recent breakout.
But until the two big stock averages give the all clear technical signal, investors shouldn’t chase the rally, according to Stockton.
“Short-term power gauges point higher, but we would await confirmation of the breakouts before acting on them because overbought moulds are in place on the daily and weekly charts,” Stockton said.
If the breakouts are confirmed this Friday, Stockton recommends investors lower their bearish hedges and use any eventual pullback in stock prices as an opportunity to position their portfolios “more offensively” for a last rally.
“Usually, the first pullback following a breakout provides a favorable entry point, based on the proximity of freedom fighters and support. For the S&P 500, support is initially ~3,800, but could be revised higher after a breakout,” Stockton said.
Binding the recent rally in the stock market is the breakdown in gold prices, with the perceived safe-haven commodity falling 5% from its early-May leading of $2,085 per ounce. Stockton highlighted gold’s current support level at $1,930 per ounce, representing potential too downside of 2% from current levels.