$S&P 500(.SPX)$ We hit a high of 6427 on July 31 before dropping almost 200pts back near 6200. As it stands now we are just consolidating under 6350. The bigger question is this the start of a deeper pullback or is this a dip buy? Let’s dive into 3 potential scenarios
Scenario #1: Extreme Bull
SPX continues to hold above 6270 and moves towards 6334. We end up holding 6334 and push back through 6400. Consolidate near 6400 for a couple of days followed by an aggressive break of ATH’s, pushing us to 6500. We end up rallying to 6700 by mid October.
Scenario #2: Bear Trap to Bull
SPX tries to hold above 6270 but fails to do so. We end up breaking the low of 6212 and testing 6200. We break 6200 and see a low of 6190 which then gets bought back up. We then see aggressive buying pushing us back to 6400. We consolidate near 6400 for a couple of days followed by an aggressive break of ATH’s, pushing us to 6500. We end up rallying to 6700 by mid October.
Scenario #3: Bear Case
SPX tries to hold above 6334 but fails. We drop below 6270 and test the low of 6212 again. We end up failing to hold dropping us back near previous ATH of 6150. We end up seeing a short relief rally at 6150 back to 6300 but it’s short lived. We end up breaking the previous ATH of 6150 pushing up back near 6000. We end up holding there and slowly push us back to 6300 by mid October.
We still believe the path to 7000 can come end of year but it won’t be clean. Expect shakeouts, takeouts, pullbacks, and aggressive buying. But as long as key levels continue to hold, the broader structure remains bullish.
Stick to your plan. Stay disciplined. Let’s see if this is the start of a bigger pullback or a dip buy opportunity!
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