The S & P 500 is back at all-time highs, and looks poised for a breakout — but technical analysts aren’t sounding the all clear just yet. The broad market index will have to close decisively above the 7,620 resistance level — which represents its prior June record — for a couple consecutive sessions before investors can trust the change in trend, according to market technicians. The S & P 500 closed at 7,609.78 on June 2. On Tuesday, the major average was just a little ways above that level, at around 7,700. “We would just make sure before acting upon this rally as a breakout that it is confirmed,” Katie Stockton, managing partner at Fairlead Strategies. “And it wouldn’t take much to confirm it for the S & P 500. We just want to see a couple of decisive and consecutive closes above the 7,620.” .SPX 1D bar S & P 500, 1-day A breakout could mean the S & P 500 could do better in August, which is a seasonally poor period for stocks, especially if investors start to rotate back to the megacaps and the more growth-oriented parts of the market that have only started outperforming in the last week. Strong results just last week from Amazon and Microsoft added to optimism in the megacaps. Investors are also hopeful that last month’s crisis at Situational Awareness — in which the hedge fund founded by former OpenAI researcher Leopold Aschenbrenner had to unwind many of its AI trades — was a clearing event for the market. The Roundhill Magnificent Seven ETF (MAGS) is already up nearly 4% this month, after rising 2.6% in July. “Our top areas are going to remain technology,” said Ari Wald, head of technical analysis at Oppenheimer. The technician said he favors parts of software, in addition to other areas such as capital goods within industrials, pharmaceuticals and biotech, big banks and brokers, as well as oil refineries. A breakout could also be a good sign for semiconductors, which could start to come back after investors took profits in July. The iShares Semiconductor ETF (SOXX) tumbled more than 20% last month, though it remains higher by roughly 80% this year. Paul Hickey, co-founder at Bespoke Investment Group, said he prefers the equal-weight S & P 500 from here on forward, however, as he expects the rotation in the broader market will continue. He said he prefers financials and consumer discretionary, citing the continued strength of the consumer in the face of higher oil prices. “We’ve seen broad-based strength in small-, mid-, large cap stocks,” Hickey said. “It’s basically an adaptation of that Oprah Winfrey, where she said, ‘you get a car, you get a car.’ It’s every stock is, ‘you get a rally, you get a rally.’ This moment, right now, things are rallying.” To be sure, a broad-based rally hinges on whether the S & P 500 can stay above the 7,620 level, without which technicians expect continued selling pressure for equities. Over the longer term, they said, there continue to remain hurdles for stocks, especially as the calendar turns toward the midterm elections in the fall. But if the S & P 500 is able to confirm the breakout, the broad market index has a good chance of ending the year higher from here, technicians say. “Looking out through the balance of the year, especially as seasonals do improve in the fourth quarter, the S & P 500 should be able to end the year higher,” Oppenheimer’s Wald said.
