The S&P moved to a new all-time high last week on 8/27/2018.
- The S&P 500 traded at an all-time on 8/27/2018 at 2898.25. This market move is considered a breakout from a long consolidation pattern that started on 2/9/2018 at 2532.69.
- The old resistance line now becomes potential support for selling at 2872.87.
- The index is now overbought according to RSI since it is above the 70% line. This could hurt future buying.
- However, the index was overbought in January, and it stayed overbought from 1/2/2018 to 1/30/2018.
We feel that a consolidation is needed above the old high before another substantial up move can begin. We also feel the potential support at 2897.87 will hold if selling does come into the markets.
When an index moves to an all-time high, it is difficult to predict how high the index might go in the future. One method that might provide a potential answer is a measured move calculation. If we take the 2/9/2018 low of 2532.69 and measure the percent move up to the breakout to an all-time high, 8/27/2018 at 2898.28, we get a move of 13.80%. We then do the math 2898.32 X 13.80% = 399.96. Then 399.96 + 2898.32 = 3,298.28. So, a guess at high the S&P can move to over the six months to a year is potentially 3298.28. We must repeat this is a guess or an estimate at best!
John N. Lilly III, AAMS
Portfolio Manager, RJ
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S stock market. Past performance may not be indicative of future results. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investors’ results will vary. Opinions expressed are those of the author John N. Lilly III, and not necessarily those of Raymond James. The information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. The charts and/or tables presented herein are for illustrative purposes only and should not be considered as the sole basis for your investment decision.