The S&P 500 (SPY) broke above a critical level of resistance this past week, and now the question on everyone’s mind is what happens next? I believe that the market continues to rally. Premium content: The Trend For Stocks Has Turn Higher

The break out at 2,935 was pretty significant for many reasons. The first was how the index had to fight to get over that level of resistance, with at least three successive attempts. Another reason, we reclaimed the December uptrend, which posed as a second level of resistance. The index also took out resistance at 2,975, which immediately began to act as support, a strong level of support at that once reclaimed on Thursday. These are vital facts and can not be just glazed over. The stronger and more fierce resistance is on the way up, the stronger it is when acting as support.

It will no doubt set up a challenge of 3,000 early during the week of September 9.

Also, the advance-decline has now made a new high, and the RSI is steadily trending higher. All signs of bullish momentum coming into the market.

RUSSELL (IWM)

I know there is some worrying among some investors that the Russell is signaling trouble ahead. First off, I think that is about to change. The advance-decline line has also reached a new high, and the RSI is trending high. A sign that momentum is entering the small-caps.

I think that momentum will continue to build and help to get the index over resistance at 1,536.

VIX

The VIX also fell to its lowest levels since the beginning of August to around 15. It seems that it could continue to decline towards 12.That should also help to give the index a boost higher.

The S&P 500 is also currently trading around 16.5 times my 2020 earnings estimates of $180.17, which is certainly not expensive based on historical trends.

All together, it makes me feel a whole better than I did last weekend.