The SPDR S&P 500 ETF Trust (NYSE:SPY) is approaching a near-term top that will put a major limit on gains for the rest of the year.
That’s the message today from TradingAnalysis.com founder Todd Gordon, who explained his thesis to CNBC:
We see a pending top in the market in the next three to six months, and at that point the fundamentals will confirm [the market’s price action] as the Fed begins to wind down the size of the balance sheet, drain some liquidity from the system, and that’s what will eventually confirm what the price action has already told us,” Gordon said Wednesday on CNBC’s Trading Nation
Gordon notes the S&P 500 has a level of support at 2,400, while a longer-term top is just ahead at the 2,500 level. As you can see in the chart above, a channel of resistance has formed between 2,000 and 2,450.
The good news is, Gordon doesn’t see a potential bear market forming until at least a year from now, when earnings growth could start to level off.
The SPY was trading at $242.74 per share on Thursday morning, down $1.50 (-0.61%). Year-to-date, the largest ETF tied to the benchmark S&P 500 index has gained 8.59%.
SPY currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 110 ETFs in the Large Cap Blend ETFs category.