Yahoo Finance 4 reasons why bulls will shatter stock market ceiling
The S&P is range bound and the fact that it keeps failing at or near all-time highs is a bad sign for bulls. Is that all there is for this bull market?
Not so fast. Jonathan Krinsky, chief market technician at MKM Partners has identified patterns that suggest the price action in the S&P (^GSPC) is actually quite positive.
Krinsky said that although it’s true the market is struggling at its highs, the S&P is also failing to break below its lows. “We’re truly range bound and when that happens (technical analysis) sides with the primary trend,” said Krinsky. And that primary trend is higher.
Also Krinksy noted that, historically, the more times the S&P tests upside resistance the more likely it is to break out. And so far, the S&P 500 has tested resistance about 5 times.
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In addition, “We still have a rising 200-day moving average. It’s sitting around 2030,” Krinskly said. “With the exception of last October during the Ebola scare, the S&P hasn’t breached the 200-day in 3 years .
On top of all that, Krinsky said patterns in the SPDR S&P Bank ETF (KBE) look as if the sector is about to rally after moving sideways for about two years. “If the S&P has been able to make this incredible rise with the financials moving sideways, a breakout to the upside in this sector could be the catalyst that drives the next leg.
All told, Krinsky says the technicals make it hard for him to feel bearish. “We think the S&P takes out 2120 and trades up to 2200.”
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