Recently, everyone appears to have built up an idea that the bullish phase of the market would soon follow a yellow brick road leading the S&P to another downfall just like last December. These past seven weeks seem to want to prove them wrong. The signs of such a downfall ahead has been swept away as the index proceeds to the path that will eventually lead it to breaking its 2,930 record in September. Currently at 2,785, the S&P 500 is five percent away from achieving it.

After the announcement of expectations to close the trade deal with China, Tony Dwyer of Canaccord Genuity emphasized expanding market energy as affirmation of a continuous rally exhibited by the index. Friday went to its close with 90% of the stocks doing better than their average performances in the course of 50 days, the highest it has been since 2016. If we use the past as criterion, similar occurrences have often led the stocks to higher prices after three months, raising the S&P 500 up by an average of 5.1 percent.

This year has presented us with one of the quickest recoveries the index has experienced after undergoing an incredible fall during a time where there is worry over the growing uneasiness on global growth and with the Fed tightening up financially. Naturally, nobody can truly know what happens next. The index is picking up its pace as the S&P 500’s 14-day corresponding strength index aproaches 70, happening once again after last August. A reading going through that level is usually interpreted as an indication that the stocks have surged dramatically and rapidly. But this year still presents hurdles for the index as it reaches the 2,800 level which has triggered several standstills in rallies last year. As of now, one could only keep a close watch and prepare for what will happen next.

By: Cyril Latrice Cajanding