S&P 500 Fundamental Analysis – July 4-8, 2016 – Forecast

The S&P 500 surprised the markets seeing a huge gain on Friday to trade back above the 2100 level seeing a gain of 3.10% for the week. Very few people saw the United Kingdom’s decision to leave the European Union (EU) coming, and I’ll be the first to admit that I wasn’t one of them. The vote was an absolute shocker, and we saw that surprise reflected throughout the S&P 500 Index the two following days.

Despite the violent swings, the S&P 500 has rallied more than 5% after bottoming out around 1,991. It also bounced back above 2,040, which ultimately keeps that support level intact.

If the S&P can hold above it over the next few days, it will be a very bullish sign that the panic is over. If not, the next key level will be Monday’s low of 1,991.

The next week should be very telling for us as we’ll likely find out where the index is headed as we begin the third quarter. Of course, there are plenty of factors that will influence the indices — earnings and the Federal Reserve top that list — but all in all I’m still bullish on the market’s trajectory between now and year-end and expect new highs in the coming months.

With Friday’s gain, the S&P 500 is approaching familiar resistance levels that have proven difficult to penetrate through the first six months of the year. The large-cap index faces immediate resistance around the pre-Brexit close of 2,113.

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