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The S&P 500 Gets Closer To Reaching 3030, Potentially As Soon As May 15

By Michael KramerStock MarketsMay 03, 2019 02:35AM ET
www.investing.com/analysis/the-sp-500-may-hit-3030-over-the-next-two-weeks-200416347
The S&P 500 Gets Closer To Reaching 3030, Potentially As Soon As May 15
By Michael Kramer   |  May 03, 2019 02:35AM ET
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This post was written exclusively for Investing.com

The stock market has been on a resilient rise since the December lows, with the S&P 500 mechanically marching higher, to the tune of almost 25%. It has been perfect, almost too perfect, practically robotic. When digging deeper into the technical charts, some patterns emerge, suggesting the recent rise isn’t over. Those patterns would indicate that the S&P 500 may be on a pace to increase to around 3,030 over the next couple of weeks.

Economic data continues to support the recent rise in the stock market. Couple that with earnings that have been coming in better than expected, along with strong revenue growth, and it's no wonder there's been a continual bid to the market. Thus far, every pullback in the market appears as if it's being used by investors as a buying opportunity.

Even the latest Fed meeting revealed the FOMC is in no rush to cut interest rates despite the fact that low inflation couldn’t derail the rally. The market fell briefly following the announcement but managed to hold technical support around 2,900 on Thursday, May 2.

S&P 500
S&P 500

Chart powered by TradingView

Higher-Highs

The S&P 500 has been making a series of higher highs, and higher lows. Why is this interesting? Because the S&P 500 rose in three increments of about 160 points from Dec. 26 through Feb. 5. That pace slowed somewhat, rising in three increments of nearly 130 points from Feb. 8 through April 17. The chart below shows how mechanical the rise has been, and is what one would consider algorithmically driven.

2 to 3 Week Increments

Even more impressive is that, each time the index has rallied, paused, and resumed, the move higher has lasted for a period of 2 to 3 weeks. Currently, the S&P 500 appears to be in the middle of its next advance. This puts the index on a pace to reach 3,030 by roughly May 15, should the advance last 2 to 3 weeks along with an increase of around 130 points, like the previous 3 moves higher.

S&P 500
S&P 500

Chart powered by TradingView

Fundamental Underpinnings

However, there is no doubt that the recent rise to the market is due to improving fundamentals. The views of an economic slowdown that swirled during the stock market meltdown of the fourth quarter have eased. That is because the global economy may never have been as dire as some feared. For example, last week it was revealed that first quarter GDP grew in the U.S. at an annualized pace of 3.2%. Meanwhile, the most recent U.S. manufacturing PMI survey suggests the manufacturing sector is still in expansion.

U.S. GDP
U.S. GDP

Chart powered by TradingView

Earnings data continues to come in better than feared as well. Through April 30, the latest data from S&P Dow Jones shows 211, or 73%, of the S&P 500 companies have beaten analysts’ estimates. Additionally, only 53, or 18% have missed; while 25, or 9% have met. That is much better than the 68% of companies that beat in the fourth quarter. Additionally, revenue has increased by 5%, on par with the fourth quarter. Meanwhile, operating margins have expanded to over 11% in the first quarter from 10.1% in the fourth quarter.

If it feels like there has been an underlying bid to the market. The charts can confirm it. Even more impressive is how orderly and evenly the stock market has increased. If this current pace continues, then it seems likely that the S&P 500 is on a course to reach 3,000 and beyond very soon.

The S&P 500 Gets Closer To Reaching 3030, Potentially As Soon As May 15
 

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The S&P 500 Gets Closer To Reaching 3030, Potentially As Soon As May 15

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Comments (8)
Lam gol
Lam gol May 03, 2019 4:15PM ET
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LOL, 75% of released earnings so far clearly point  to  3 quarters of negative profits compared to last year(i.e. profits recession ), but  yeah, fundamentals are strong....
Francis Drake
Francis Drake May 03, 2019 11:08AM ET
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The area from 3048 to 3124 is full of Fibonacci .It's like with a simple gun facing a tank.
Francis Drake
Francis Drake May 03, 2019 11:07AM ET
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If true on 15/5 we'll se the absolute high in area 3030 ( i think 3048) or 1 month late in the area 3048-3124.Then the crash to 1883-1931.
Francis Drake
Francis Drake May 03, 2019 11:04AM ET
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4.618x666(absolute low in 2009 on S&P500) =3076  Fibonacci 2x1552(absolute high 2008)=3124. (3124+3076)/2=3100. . Selle before area 3048-3124.Market wil crash to 1883-1931.
Tim Boyd
Tim Boyd May 03, 2019 10:32AM ET
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Thank you for the puff piece.
Da Plumber
Da Plumber May 03, 2019 7:46AM ET
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I stopped reading at: Couple that with earnings that have been coming in better than expected
Da Plumber
Da Plumber May 03, 2019 7:46AM ET
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Take a look at the number of revisions made to earnings estimates prior to the releases. The earnings were gamed like they always have been. Of course mist companies will beat.
jim boblooch
jim boblooch May 03, 2019 7:41AM ET
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Fantastic! thanks.
Mike Mike
Mike Mike May 03, 2019 7:06AM ET
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Outstanding DD
 
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