For more than two years, the S&P 500 traded between 1,800 and 2,130 before its surprise breakout on July 11. The breakout took many traders by surprise considering it came on the heels of the Brexit vote, which leaves a number of question marks surrounding the European economy. Investors also no longer seem concerned about slowing growth in China, which sent the S&P 500 to the low end of its trading range in August of last year and in January and February of this year.
Yet, even with Stifel this week predicting a U.S. recession within the next nine months, the S&P has surged to 2,175 without offering much of a pullback for potential buyers to take advantage of.
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Technical market analysts know that breakouts to new highs are often followed by re-tests of previous highs. Once a breakout occurs, previous resistance levels become technical support levels. That trend likely means that there are a number of traders watching the 2,130 level as a possible buying opportunity, but the S&P 500 has so far retreated no further than 2,159.
So far, Q2 earnings season has been mixed overall, but Apple Inc. (NASDAQ:AAPL)s strong numbers on Tuesday should give the market a bit of a boost in Wednesdays session.
For the rest of the week, traders will be watching Facebook Inc (NASDAQ:FB) earnings on Wednesday and Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) earnings on Thursday.
In addition, the Federal Reserve statement on Wednesday could also move the market.
So far this year the SPDR S&P 500 ETF Trust (NYSE:SPY) is up 6.5 percent.
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Disclosure: The author holds no position in the stocks mentioned.
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