Which Will Hit First: SPX 6100 or SPX 5100? | The Aware Investor

Final Friday, the S&P 500 completed the week just under 5700. The query going into this week was, “Will the S&P 500 get propelled above the 200-day?” And as I evaluate the proof after Friday’s shut, I am noting that the SPX is nearly precisely the place it was one week in the past!

That is right–after all of the headlines, tariff tantrums, and earnings stories, the S&P 500 ended the week 0.4% beneath the place it began. This “lack of conviction” week led me to submit the next ballot on X, asking followers to resolve which they felt would occur first: a retest of the February 2025 excessive or a retest of the April 2025 low.

I used to be truly fairly shocked that there wasn’t extra optimism after April’s unimaginable rally section, however you’ll be able to see that 55% of respondents thought the February excessive round 6150 can be hit first. So not like the AAII survey’s current readings, there look like extra bulls than bears on the market.

Based mostly on this week’s prolonged choppiness, I believed it may be good to revisit an strategy referred to as “probabilistic evaluation” to think about 4 potential paths for the S&P 500 between now and late June 2025. Principally, I will share 4 completely different situations, describe the market circumstances that will doubtless be concerned, and in addition share my estimated likelihood for every state of affairs.

By the way in which, we final ran this analytical course of on the S&P 500 again in January, and you’ll want to see which state of affairs truly performed out!

And bear in mind, the purpose of this train is threefold:

1. Think about all 4 potential future paths for the index, take into consideration what would trigger every state of affairs to unfold when it comes to the macro drivers, and evaluate what alerts/patterns/indicators would verify the state of affairs.
2. Determine which state of affairs you’re feeling is probably, and why you assume that is the case. Remember to drop me a remark and let me know your vote!
3. Take into consideration how every of the 4 situations would influence your present portfolio. How would you handle threat in every case? How and when would you are taking motion to adapt to this new actuality?

Let’s begin with essentially the most optimistic state of affairs, with the S&P 500 index persevering with the current uptrend section to retest all-time highs by June.

Possibility 1: The Tremendous Bullish State of affairs

Our most bullish state of affairs would imply that the aggressive rally section off the April low would basically proceed in its present type. After maybe the briefest of pullbacks on the 200-day shifting common, we proceed to the upside. This state of affairs would probably imply the Magnificent 7 shares must actually discover their mojo, with names like GOOGL, AAPL, and AMZN lastly breaking via their 200-day shifting averages.

Dave’s Vote: 10%

Possibility 2: The Mildly Bullish State of affairs

What if the S&P 500 stalls across the 200-day, with a pullback that conjures up much more indecision amongst buyers? Maybe we’re nonetheless in “wait and see” mode as some tariff negotiations show fruitful, however empty transport containers remind customers of the prospects of power inflation.  By mid-June, we’re no nearer to an actual clear sense of course than we’re right now.

Dave’s vote: 30%

Possibility 3: The Mildly Bearish State of affairs

Due to the time-frame I’ve chosen, there will not be one other Fed assembly till after this era is over. So, what if inflation knowledge begins to indicate actual worth points, shopper sentiment actually begins to falter, and the Fed is unable to take any significant motion to deal with mounting considerations? If we fail to push above the 200-day shifting common quickly, then 5500 can be a probable space of help on the way in which down.  This state of affairs brings us proper again all the way down to that degree.

Dave’s vote: 40%

Possibility 4: The Very Bearish State of affairs

You all the time want a bear case, and this one would entail a brand new distribution section that takes the most important benchmarks all the way down to retest the April low. I would say an affordable draw back goal can be 5100, and we’ll spend the month of June debating whether or not we’re forming an enormous double backside sample or see one other bounce larger. Defensive sectors shine as buyers rotate huge time to risk-off positions.

Dave’s vote: 20%

What possibilities would you assign to every of those 4 situations?  Take a look at the video beneath, after which drop a remark with which state of affairs you choose and why!

RR#6,

Dave

P.S. Able to improve your funding course of? Take a look at my free behavioral investing course!

David Keller, CMT

President and Chief Strategist

Sierra Alpha Analysis LLC

Disclaimer: This weblog is for instructional functions solely and shouldn’t be construed as monetary recommendation. The concepts and techniques ought to by no means be used with out first assessing your individual private and monetary scenario, or with out consulting a monetary skilled.

The writer doesn’t have a place in talked about securities on the time of publication. Any opinions expressed herein are solely these of the writer and don’t in any method symbolize the views or opinions of another individual or entity.