{"id":11676,"date":"2024-10-26T00:03:55","date_gmt":"2024-10-26T00:03:55","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/10\/26\/why-the-sp-500-wont-break-6000-yet\/"},"modified":"2024-10-26T00:03:55","modified_gmt":"2024-10-26T00:03:55","slug":"why-the-sp-500-wont-break-6000-yet","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/10\/26\/why-the-sp-500-wont-break-6000-yet\/","title":{"rendered":"Why the S&P 500 Won\u2019t Break 6000 (Yet)"},"content":{"rendered":"
\n

When I was growing up, I loved Choose Your Own Adventure<\/em> books.\u00a0I see the world in shades of gray instead of black-and-white, so I was immediately drawn to the seemingly endless scenarios that the main characters could experience as I made different choices for them.<\/p>\n

As investors, we often get so caught up in one particular market narrative that we are unable to think \u201coutside the box\u201d and consider other possible outcomes.\u00a0Successful investors I\u2019ve worked with have been exceptionally good at looking at all the possibilities, challenging their own investment thesis by opening themselves up to other options.<\/p>\n

Today, we\u2019ll walk through four potential outcomes for the S&P 500 index over the next six to eight weeks.\u00a0As I share each of these four future paths, I\u2019ll describe the market conditions that would likely be involved, and I\u2019ll also share my estimated probability for each scenario.\u00a0\u00a0<\/p>\n

By the way, we ran through four scenarios for the S&P 500 back in July, and you may be surprised to see <\/em>which scenario actually played out<\/em><\/a>!<\/em><\/p>\n

And remember, the point of this exercise is threefold:<\/p>\n

Consider all four potential future paths for the index, think about what would cause each scenario to unfold in terms of the macro drivers, and review what signals\/patterns\/indicators would confirm the scenario.
\nDecide which scenario you feel is most likely, and why you think that\u2019s the case. Don\u2019t forget to drop a comment and let me know your vote and what you think will cause that scenario to play out.
\nThink about how each of the four scenarios would impact your current portfolio. How would you manage risk in each case? How and when would you take action to adapt to this new reality?<\/p>\n

Let\u2019s start with the most bullish scenario, where the S&P 500 keeps going with a consistent pace and breaks above 6000 by early December.<\/p>\n

Option 1: The Super Bullish Scenario<\/h2>\n

The S&P 500 has experienced a remarkably strong run off the low in early August. This first scenario would mean a continuation of the pace of the current trend, suggesting the SPX would remain above a trendline drawn from the August and September lows.\u00a0This scenario would include the S&P breaking above 6000 for the first time, and by early December, we\u2019d be wondering how we made it through an entire calendar year with the biggest drawdown sitting at just less than 10%.<\/p>\n

Dave\u2019s Vote: 5%<\/em><\/p>\n

Option 2: The Mildly Bullish Scenario<\/h2>\n

Let\u2019s say that Trump wins a second term, and investors see that as a fairly pro-business and pro-market outcome.\u00a0At the same time, however, new economic data and the November Fed meeting leave investors a little skeptical of the Fed\u2019s ability to navigate the soft landing scenario into early 2025.<\/p>\n

The second scenario would mean we drift a bit higher, but breadth conditions break down as investors gravitate to Magnificent 7 stocks and other safe havens as the VIX pushes above 20. We don\u2019t see a major correction into early December, but it still feels like one is just around the corner and everyone\u2019s talking about overvaluations and a potential Q1 pullback.<\/p>\n

Dave\u2019s vote: 25%<\/em><\/p>\n

Option 3: The Mildly Bearish Scenario<\/h2>\n

A Harris victory could certainly weigh on the markets as we progress through Q4, as we realize how much investors had been pricing in a Republican White House.\u00a0Skepticism of the Fed reaches a fever pitch as we\u2019re no longer talking about a potential soft landing, but rather when the next major correction will play out.\u00a0Volume and breadth divergences that have been growing in October continue to play out, and a 2018-style Q4 drop becomes our reality in 2024.<\/p>\n

Dave\u2019s vote: 50%<\/em><\/p>\n

Option 4: The Very Bearish Scenario<\/h2>\n

You always need a \u201cdoomsday\u201d scenario, where things get bad and stay bad. What if the S&P 500 starts selling off as a frustrating earnings season leads into a contentious election and a November Fed meeting raises more questions than answers?\u00a0Paul Tudor Jones famously remarked, \u201cNothing good happens below the 200-day moving average.\u201d And in this scenario, that\u2019s exactly what we\u2019re facing in December as we wonder where how and why the normal Q4 rally is nowhere to be seen.<\/p>\n

Dave\u2019s vote: 20%<\/em><\/p>\n

What probabilities would you assign to each of these four scenarios?\u00a0Check out the video below, and then drop a comment with which scenario you select and why!<\/p>\n

<\/div>\n

RR#6,<\/p>\n

Dave<\/p>\n

P.S.<\/strong> Ready to upgrade your investment process?\u00a0Check out my free behavioral investing course<\/a>!<\/span><\/p>\n

David Keller, CMT<\/strong><\/p>\n

President and Chief Strategist<\/p>\n

Sierra Alpha Research LLC<\/p>\n

Disclaimer: <\/em><\/strong>This blog is for educational purposes only and should not be construed as financial advice.\u00a0The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.<\/em><\/p>\n

The author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

When I was growing up, I loved Choose Your Own Adventure books.\u00a0I see the world in shades of gray instead of black-and-white, so I was immediately drawn to the seemingly endless scenarios that the main characters could experience as I made different choices for them. As investors, we often get so caught up in one […]<\/p>\n","protected":false},"author":0,"featured_media":11677,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-11676","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/11676","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=11676"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/11676\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/11677"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=11676"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=11676"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=11676"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}