After three consecutive days of solid gains, market sentiment is heating up once again. The S&P 500 is now flirting with new highs, and the big question is: can it smash through the psychological barrier of 5500?

Momentum is clearly back, fueled by strong earnings, optimism around potential rate cuts, and cooling inflation data. Tech giants continue to drive the rally, while sectors like financials and consumer discretionary are showing fresh strength. With breadth improving and fear levels dropping, the bulls seem firmly in control — for now.

However, volatility is lurking beneath the surface. Trump's unpredictable tariff policies, flip-flops on Federal Reserve actions, and global election uncertainties could still cause sudden market swings. Moreover, after such a sharp rebound, some investors worry that a pullback could be lurking just around the corner if macro risks flare up or if earnings growth falls short.

My Take:

The S&P 500 has the momentum to test 5500 if earnings stay strong and macro fears stay contained.

But after a streak of gains, it’s wise to stay nimble — rallies can overheat quickly.

Watching leadership stocks and market breadth will be key signals for whether the rally has real staying power.

Three winning days feel great — but in this market, cautious optimism beats blind euphoria.