S&P 500 Technical Analysis forecast for week of August 17-24, 2014

The S&P 500 rose during the course of the week, breaking the top of the previous week’s hammer. Because of this, it looks like we are heading back towards the 1990 handle, an area that can be used as a staging for the massive breakout that’s expected at the 2000 level. With that, the move would suggest that the market is going to break out and go higher on a longer-term move as well. You can see on this chart that we have a massive uptrend line that the market has been falling, and there is nothing on this chart that suggests we can continue to go higher.

Ultimately, money is looking for a place to go. In a world where the bond market simply don’t offer much in the way of yield, it makes sense that money will go into the stock market, and most specifically the stock market that represents the US economy, one that is doing much better than most other economies around the world. With this, we preferred the S&P 500 over most stock indices globally, and believe that it should be one of the best formers globally.

We look at pullbacks as buying opportunities, and have absolutely no interest in selling this market until we get below the 1800 level, something that is not happening anytime soon. With that being the case, we are not only a “by on the dips” type of firm, but we are also a “buy-and-hold” type of firm. With this market looking so strong, there’s just a lot of difficulty imagining that the market is going to fall apart all of a sudden.

True, we have had a significant pullback in the last couple of weeks, but we have already recapture more than half of it and there’s no sign of things leading up. Using short term pullbacks might be the way to take advantage of a longer-term move, because quite frankly once we get above 2000, this market should head much, much higher. In fact, we could very easily be at the beginning of a multi-year run higher.