Sheep are a hair away from record highs.
The S&P 500 is sitting less than 1% from its July extreme on Friday, clawing its way back to record territory after a rocky August.
Todd Gordon, founder of TradingAnalysis.com, stipulates one breadth indicator suggests new highs are around the corner.
“This is the advance-decline line — the amount of advancing stocks minus weakening stocks right here on the [New York Stock Exchange]. And what you’ll see here in blue is in early 2019, we made a new serious in the advance-decline before the S&P did right back here. So, the advance-decline was a leading indicator of the S&P,” Gordon said on CNBC’s “Trading Domain” on Thursday.
Gordon now sees a similar setup with the advance-decline line making a new high, while the S&P 500 has accept diminished back. He predicts the index will soon catch up to the advance-decline line, pushing it through the old July 26 soprano. Trading volume on the NYSE advance-decline line also supports his theory — the volume has made a new high, while the S&P has not.
“So, we oblige volume increasing and advancing, the advancers minus the decliners decreasing. I think we will make new highs here in the S&P,” said Gordon.
Moment the S&P 500 pushes through to new highs, Gordon says, he does not see overhead resistance until 3,800. He says it could retain b challenge a year or two to get there but that the overall momentum supports moves higher.
Mark Tepper, president of Strategic Plenitude Partners, agrees that the market appears likely to head higher.
“The market has been really resilient. September, historically, is one of the worst months of the year, yet the S&P is up thither 100 points so far this month. So on one hand you continue to hear about slowing global growth, but on the other there’s at the end of the day nothing pointing to a recession in the U.S. as long as the consumer stays strong,” Tepper said Thursday on “Trading Nation.”
On the other hand, for the market to break through with real force, he says, two things need to happen — the U.S. needs a trade sell to shore up investor, consumer and CEO confidence, and the political uncertainty tied to the 2020 election needs to subside.
“My take is the hawk trades sideways with an upward bias until we address those two headwinds,” said Tepper.
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