Seemingly unstoppable U.S. equity markets continue to press to new secular highs as the benchmark S&P 500 closes in on the 4,000 mark.
Yesterday's session was strong, with broad-based buying (breadth) powering the majority of U.S. indices to new highs simultaneously—and the SPX is now just 85 points away from 4K (around +2% from current levels). Those familiar with our work know we felt strongly that the S&P could hit the 4,000 mark at some point in 2021—we did not, however, think it was likely to happen less than two months in—a development which in our opinion shows the true power of what liquidity-driven momentum can do to the trading environment.
Of course, we are not there just yet—and once again we find ourselves pushing into overbought/extended territory on a short-term basis—where this morning we see equity futures cooling off a bit. But investors have seen this movie before and even breaks below some minor trend lines recently have failed to stop the 'buy the dip' progression that has been in place since last year. So while we remain on guard for elevated volatility to strike at some point in the weeks ahead, we believe investors should stay the course on the road to S&P 4,000.
With these recent developments in mind, we thought it would be helpful to update readers on our technical outlook and themes for 2021 and beyond.