The SP 500 index has been on a roller-coaster ride over the past few months, and the recent breakout from the recent range of 2950-3000 is one to pay attention to. Many are asking: Will the rally continue and reach all-time-highs by year-end?
A good starting point is to look at where market sentiment is right now. Bullish sentiment is running high, fueled by both an influx of new investors as well as a heightened level of optimism amid favorable macroeconomic factors. In addition, economic data points continue to show strength, with recently released jobs numbers coming in above expectations. Market prices are also being impacted by the pandemic, with the Fed continuing with its accommodative stance and promising to eat any losses due to market volatility.
The Gamechanging Newz (GNG-TV) analysis of the current technical state of the markets suggests that a continuation of this positive trend is likely. The breakout of the SP 500 is certainly encouraging, though one must be mindful that these types of moves can be fleeting.
It’s important to remember that the markets are forward looking and often move ahead of the underlying data. That being said, a surge in earnings season could certainly propel the SP 500 higher. Any potential catalysts of this type, such as a COVID-19 vaccine or an unexpected positive move from the Fed, could very well be the engine of a sustained rally for the rest of the year.
At the same time, however, there are many potential pitfalls that could stop the rally dead in its tracks. A jump in corporate earnings could be followed by a sudden bout of profit-taking, while the upcoming US presidential election could bring with it a slew of geopolitical risk.
Ultimately, the success of the SP 500 rally will depend on investors’ willingness to look past these risks and stay invested in the markets. That being said, with a continuation of the current level of investor optimism, it is entirely possible that the SP 500 could rally to fresh all-time highs by the end of 2020.
