Mid-week market update: It’s finally happened. The SPX staged a convincing upside breakout from its cup and handle formation. Depending on how you draw the lower line, the upside target is in the 2925-2960 range. The first test will be resistance of the January highs.
Upside breakouts are bullish. What more do you need to know?
The upside breakout has been confirmed by the bullish market action in other US and non-US indices. The NASDAQ Composite has already made an all-time high.
The broadly based Wilshire 5000 has made a similar upside breakout of a cup and handle formation.
I wrote earlier in the week that China related plays were wash-out and poised for relief rallies (see Tariffs to the left, tariffs to the right…Contrarians buy China!).
European markets have also turned up. The Euro STOXX 50 has rallied and violated a downtrend, which is bullish.
In short, the upside breakout in the SPX is supported by both US and non-US indices. The next challenge for the bulls is to maintain momentum with a series of “good overbought” conditions. Should that happen, it could form the backdrop for a FOMO (Fear of Missing Out) bullish stampede in the manner of the late 2017 market melt-up.
Disclosure: Long SPXL