Taking a step back to look at the big picture using a monthly chart of the E-mini S&P 500, we can see the market is trading in an expanding wedge or megaphone pattern. This suggests an eventual run to resistance (3,500.00 to 3,600.00). However, that doesn’t mean it will be a straight shot. In 2016, the S&P rallied through July, but then paused to consolidate and mildly correct gains for August, September, and October before resuming the rally. We suspect we could see something similar. Thus, we aren’t expecting the rally to fail, but we do think it will see a moderate correction or at least consolidation.
On a daily chart of the S&P, we’ve pinpointed resistance at 3,280.00 to 3,290.00 which marks the price gap left in the S&P 500 futures on Friday, February 21st to the Sunday night open on the 23rd. We believe this technical barrier will hold successfully for now, and probably until after the election. A break above it would open the door to new all-time-highs and it seems premature for that given the uncertainty surrounding Covid-19 and the election.
