on June 17, 2024

S&P 500 Price Targets Are Going Higher

SPX 6,000?

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Our View

I know some people say that the MrTopStep Trading Rules 101 have seen their day, but I have to disagree. The one we are talking about now is the PitBull’s rule about looking for a low the week before the monthly expiration — and in this case, the June Triple Witching.

I asked Rich Miller — AKA HandelStats — to run a study on how often this trade actually works. He said there is a 60% chance Thursday or Friday will be up the week before the expiration. After that, he said the stats are positive for Monday and Tuesday, down Wednesday, up Thursday, but down on Friday.

Let’s face it, Powell said exactly what I started saying in late 2023 — that the market was getting ahead of itself about lowering rates six times in 2024 and I stayed on it all year and the Fed finally came clean about the prospects of higher rates for longer.

After the demise of my S&P desk during the 2008 Credit Crisis, the US Government’s total debt stood at about $10 trillion at the end of FY 2008. Of that, approximately $5.8 trillion was debt held by the public in the form of Treasury securities. Today the public debt of the United States is around $34.8 trillion.

According to the Congressional Budget Office, the Treasury market has more than doubled over the past 10 years, from $12.5 trillion in 2014 to $27 trillion at the end of May. Going forward, federal debt could grow to $48 trillion by 2034. For comparison, the Fed spent $4 trillion in the credit crisis. Now the government is spending $1 trillion every 100 days.

I had a favorite saying during the Credit Crisis: “Wall Street had a big party and we weren’t invited, but we got the bill to clean it up.”

Our Lean

On the brighter side of things I still think it’s a “buy the pullbacks market,” but I also want to tell you another rule which the PitBull taught me. It’s called the “20 point rule.” It goes into effect the first time the market crosses over a big figure — like ES 5500.00.

In that case, the 5520 area — or 20 points above the key level — becomes initial resistance the first time up.

Goldman upped its year-end target for the S&P 500 for a third time up to 5,600, up from 5,200 in February. Goldman’s new target implies a roughly 3% advance in the index from its Friday close. Evercore just assigned a Street-high target for SPX 6,000 this year and made a case that we could see SPX 7,000 in 2025.

I got news for you: A lot of banks have already upped their forecast and more will continue to do so.

Our Lean: Any day can be a pullback day, which should ultimately lead to higher prices. If the ES gaps higher, I would sell the open or the first rally above the gap and look for a spot to cover and go long — especially if the volume drops. Should the ES gap lower, I want to buy the open or the first drop after the gap down.

Today is the first day of the futures rollover, which should add to the lower ES and NQ volumes.

MrTopStep Levels:

How to use MTS levels

MiM and Daily Recap

The ES traded down to 5462.50 on Globex and opened Friday’s trading session at 5483.25. The ES rallied up to 5490 at 9:40, pulled back to 5473.25, rallied to a lower high of 5487, then fell to a lower low of 5472.25 at 10:35. After the low, the ES rallied to a new high of 5492 at 11:30, pulled back to a higher low of 5476.25 at 11:50, rallied to a new high by 3 ticks to 5492.75 at 12:10 and pulled back to 5483.75 at 12:30. It was that low that set up the next leg to a new high of 5499.00 at 1:17.

From there, the ES slowly pulled back to 5487.75 going into 2:05, rallied up to 5498.00 at 2:55, sold off down to 5491.25 at 3:00, dropped down to 5494.25 at 3:12 and then rallied up to 5499.00 at 3:27. After that, it pulled back to 5495.75 at 3:30 and then traded up to a new high at 5500.00 at 3:36, dropped down to 5493.75 at 3:44 and traded 5495.50 as the 3:50 cash imbalance showed $1 billion to buy and traded up to a new high at 5303.25 and traded 5502.00 on the 4:00 cash close.

After 4:00, the ES pulled back to 5498.25 at 4:12 and settled at 5500.25 on the 5:00 futures close, up 54 points or 1.18%. The NQ settled at 19,957.00, up 346.25 points or +1.77%, the 10-Yr note settled at 110’245, up 15 points or +0.04%, Bitcoin (TCN4) ended at 66,460, down 1,334 points, gold futures rose 1.4% and settle at $2331.40 per troy ounce, crude oil futures settled at $78.45 per barrel, up 3.9% for the week and the CAC fell 6.2% this week — its worst since 2022 — and the Stoxx 600 index fell 2.4% on the week, its weakest performance since October.

In the end, the big drop on Globex set up the rally to ES 5500+. In terms of the overall tone, both the ES and NQ acted firm. In terms of the ES’s overall trade, volume was steady, a total of 1.71 contracts traded.