Last week, the market was finally able to break out of the restraints of the range it had been bounded to with the first meaningful move in quite sometime. Led by mostly big tech stocks to begin with as evidenced by an almost parabolic surge in the Nasdaq (NDX), many other sectors are beginning to follow their lead. This surge has also led to a fair amount of FOMO by investors and traders who doubted the initial validity of the rally, lending more momentum to the move.
As for the S&P 500 (SPX), the coveted 4200 mark has been surmounted, signaling to many market participants that this rally is very much underway. Even with the inevitable pullback that often follows such a move higher, this level should remain a strong support level.
With debt ceiling talks continuing, much of this rally has taken place in anticipation of a deal being reached, however, the hopes of one being reached by the end of last week quickly fizzled out. Now, the chances of a deal being reached before default have seemingly gone down the drain with neither side looking to budge on their proposed demands.
This will indeed continue to have a fair amount of influence on where the market goes next, whether it pushes higher on a “buy the rumor” scenario or if the default will finally be what knocks the market off its trajectory.
In the meantime, keep an eye on the key levels I highlight below in order to map out the market’s next possible move.
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Christian Tharp, CMT
This post was originally published on Wealthpop