The S&P 500 has spent the bulk of January, perhaps doing so in order to work off some of the excess that the markets have seen for the last several months.
 

S&P 500

The S&P 500 has spent most of January simply going back and forth between the 6,800 and 7,000 levels. The market will find buyers on dips from everything I've seen here. Even though we have pulled back from time to time, the market simply cannot break down yet.
 

(Click on image to enlarge)

Sometimes it's about what the market won't do instead of what it will do and at this point it looks like it just won't drop. In this environment, I fully anticipate that every time we reach towards the 6,800 level, there should be buyers, but I think it's only a matter of time before we break above the crucial 7,000 level.
 

The 7,000 Level Breakout

Breaking above the 7,000 level opens up the possibility of a move to the 7,250 level, but we need some type of catalyst. Luckily, there are major earning announcements at the very end of January and the beginning of February that could be the catalyst.

Ultimately, this is a market that has a lot of questions asked about it, but despite the fact that you are seeing headlines about everything is about selling American assets, the reality just isn't true. All you have to do is look at the chart and see that price hasn't changed much over the last 7 or 8 weeks and we are still very much in a strong uptrend longer term.

In fact, it's not until we break down below the 6,200 level that I would be concerned about the trend longer term. Any pullback at this point in time that has a short-term bounce after it, I believe, will be thought of as an opportunity and it would not surprise me all to see this market break higher to the 7,250 level over the next several weeks.

More By This Author: