When we adopted an offensive tactical position last Tuesday morning driven by a rotation into the Value, Banks, and Tanks, we highlighted how to reach a short-term target on the S&P 500 (SPX). The “economic reopening” beneficiaries have led the charge with double digit gains since Memorial Day – in less than two weeks that has brought the SPX very close to the suggested target of 3150. In the simplest form of Technical Analysis when you emerge from a trading range – you get a target by taking the spread of the trading range and adding it to the breakout point (Figure 2). We identified the range of roughly 200 points (2750-2950), and came up with 3150. The SPX is up over 5% from the breakout point and is bumping up against that target, which would be a natural place to take a breather, consolidate the incredible gains in those areas that benefit from an economic reopening.
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