What's Next for the S&P 500? April 2024 Update!

In our latest video using probabilistic analysis, we break down four potential future paths for the S&P 500. Which scenario do you see as most likely and why? Watch the video, then drop a comment with your vote and why you think that will play out over the next 6-8 weeks!
Which scenario from our January video actually played out? We'll show you the answer, and you can see those previous scenarios right here: • What's Next for the S&...
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Dave helps active investors and financial advisors make more informed investment decisions, inject more discipline into their investment process, and enrich relationships with their clients. Feel better about making better decisions!
Dave is the Chief Market Strategist at StockCharts.com, where he helps investors minimize behavioral biases through technical analysis. He is a frequent host on StockCharts TV, and he relates mindfulness techniques to investor decision making in his blog, The Mindful Investor.
He's also President and Chief Strategist at Sierra Alpha Research LLC, a boutique investment research and consulting firm focused on managing risk through market awareness. He combines the strengths of technical analysis, behavioral finance, and data visualization to identify investment opportunities and enrich relationships between advisors and clients.
Dave was previously a Managing Director of Research for Fidelity Investments in Boston, a Past President of the Chartered Market Technician (CMT) Association, and started in the financial industry just after the March 2000 market top at Bloomberg in New York.
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[@DKellerCMT]

Which scenario do you see as most likely and why? Drop a comment below and let me know! Want to see the chart for yourself? Here you go: schrts.co/NzUUVBpc

[@dnotso4574]

I'm in the option 3 camp. Hotter inflation, lower GDP, geo political risks, all cannot be ignored. History says after a pullback like the one we're in, has a dead cat bounce, and then heads lower again. Would create a good buying opportunity. RSI and MFI are currently weaker (or weakening) than a few weeks ago.

[@DKellerCMT]

Good points on RSI/MFI! D

[@Victor-sl8er]

I was right the last time. This time it will be scenario 3 I think. First scenario 2 (dead cat bounce).

[@DKellerCMT]

Dead cat bounce feels like the most likely scenario to me... D

[@tanleproe]

April 25 is the End of Best Six Months of the Year 2024. #3

[@DKellerCMT]

Sell in May works in 2024? Perhaps... D

[@fishfinder3573]

Great comments from everyone , I’m going with #1, it may take some time to develop but higher highs have a good probability

[@DKellerCMT]

* Bull enters the room. * I think we end the year higher than where we started, but could be a rocky road... D

[@robertcremeens3166]

I'm in the scenario #3 category mixed with category #2. I think we are going to see a double dip lower from April to May in SPX. Sort of like we did in late 2023 from the July high to October low then balance out for the year but not going much higher. My reasoning is that yields keep going higher and we touch 5% or slightly more on the 10 year and other rates. Inflation is sticky and is hurting the middle class and on down. I get that it doesn't hurt these Mega Caps with great balance sheets much, but I think it will affect consumption. Also the Govt funding needs will continue to push yields higher affecting like i said middle class and on down the line. Thanks for sharing your view and charts!

[@DKellerCMT]

Extended time with elevated rates would most likely put pressure on consumer behavior!! D

[@mimbaxter]

Thanks Dave, and everyone that has commented. Really does give food for thought. For me. Six weeks is the start of June. This is not a year were seasonality is a guide. I don't think option 1 as there have been new price peaks and RSI 14 below 70, so the momentum has gone for the moment, and I think recovery is outside the next 6 weeks. It is a no for option 4, looking at Gold I think we could get another inflation shock, but again not in the next 6 weeks, but copper is up. Option 2 is positive range bound and Option 3 negative range bound. With the loss of momentum I vote 3.

[@DKellerCMT]

Agree on challenges with seasonality. Q1 was way stronger than expected! Great take here Mike thank you D

[@chrisweeks7280]

I'm going with #3. I have spent the past year dabbling with TQQQ and sold at the $61 level back in Feb expecting this over extended rally to tire out. Glad to see phase one has worked, but im holding out for a test of the 200d average, which happens to line up well with the resistance and support levels we saw in July, December and January. I'm a buyer again if i see TQQQ hit that $45 level, in the mean time CSP's out of the money to make .5% a week or so.

[@DKellerCMT]

The bulls are running rampant!! D

[@DavidFilippone-ee9ch]

Scenario 3. The minor correction was not deep enough to be a viable pullback. I think we will find 20/50 day moving averages serve as resistance as the market tries to rally higher. I feel we will test the 200day moving average before the next serious leg higher. I feel we will finish year around 5500, but not before a serious correction in the month of May and a rip higher in Nov/Dec.

[@DKellerCMT]

Thanks for the thoughtful comments! Agree on both counts- more pullback, higher highs! D

[@mikem7976]

First, I think this is a great practice. We can't predict the future, but we can have a plan ready for the likely scenarios. I vote basically Scenario 3. Data supports delaying the first rate cut. The other significant event is the election. I expect the market will definitely rally once we have clarity on who wins and uncertainty is lifted.

[@DKellerCMT]

We are on the same page here D

[@gakenh01]

3) I've had my eye on the 38.2 Fib level for a while now. I did a lot of buying when we hit 4965 last week, but didn't want to miss out if that was it.

[@DKellerCMT]

Agreed on 38.2% level! D

[@yukisnoww]

I see a slightly higher high into what I see is most likely scenario 4. I had an insane week, 4/5 days went mostly as I thought and the only day it didnt, I got a large chunk of the short leg. That said, why guess? Prepare a few and just react accordingly. If there was to be a technical reason, I think breadth readings alone would give a good view.

[@DKellerCMT]

Slightly higher high on weaker momentum, then sell in May becomes a reality?... D

[@yukisnoww]

@@DKellerCMT possibly, this week is loaded with important events on the calendar, any of which will be the excuse to move price. We will see :)

[@Aleamanic]

my hunch is somewhere between scenario 2 and 3, since I believe that the market may form a coiled up sideways triangle over the next few months until there is more clarity on the inflation/rate outlook. Also consider "sell in May, go away" theory....

[@jzgtr100]

I hope you’re right. I’ve sold some iron condors. Would love have them expire worthless.

[@DKellerCMT]

A rare 2.5 vote. For now, all about the 50-day moving average, currently in play D

[@jzgtr100]

Best guess- 50 sma is resistance. Scenario #3 or #4. 20 sma served as support on the way up. We’re at the 20 right now and it’s crossing the 50. Looks pretty bearish. This week should tell us a lot.

[@DKellerCMT]

This week may be all about the 50-day MA........ D

[@flatearth8132]

Looks to me that 5084 On Futures Equals David's 5050 Pivot on SPX. 5084 was about the top in 2022. Funny that a FOMC meeting right after this level kicked off the last decline.

[@DKellerCMT]

Good take here. Market moving closest to #1! D

[@donaldpipping2587]

Bias makes me choose option 4 because just read: "South Carolina State Representative reveals that the federal government is giving voter registration forms to non-citizens", either way if I don't put my money where my thoughts are...I still win by keeping my money for another day.

[@DKellerCMT]

Option 1 is tracking pretty well!! D

[@thanhattran9361]

3

[@DKellerCMT]

We are in agreement! D

[@nissebfg5222]

#2 lower top then a bit lower

[@DKellerCMT]

That is very much a possibility here! D

[@williamsignorile4986]

Last wave up into June 6th the latest 5330/5454 I lean toward the higher

[@DKellerCMT]

Onward! D

[@Sawah781]

Scenario # 3 more like it considering the microeconomics of the inflation, the bond yields and the Chinese Joker card!! ;)

[@DKellerCMT]

Feels like we are one hot inflation number away from the next leg lower! D

[@rockitman7909]

#1’sh Dave, we already retreated to the weekly 20 mostly having to due with geo political events as you can clearly see in commodities and the sudden downward momentum in the vix. Earnings are very positive and macroeconomics becomes more predictable as time goes by. Not a straight arrow up but I see a strong rebound into summer which should then mark our next consolidation period. This is the way 💪 😂 🎸

[@DKellerCMT]

This is the way. D

[@vishal76i9]

The scenario of greenary outperforms the s&p scenario thanks for the excellent analysis.

[@DKellerCMT]

Thanks so much for watching! D

[@robertwwilliams5693]

Scenario 3 or 4. The artificially manufactured economy built on massive deficit spending is incrementally taking its toll. Higher inflation, $1 trillion debt added every 100 days, fact utilities are a leading sector, etc., does not reflect scenario 1.

[@DKellerCMT]

Scenario 1 playing out pretty well so far!! D

[@johnchow5958]

I want to see the direction of US dollar and bond yield, those will tell me a lot.

[@DKellerCMT]

Great call and I'd agree! $USD above 107 may be a game changer... D

[@user-bi6kx8ir5g]

Scenario 4 - If you look at market tops since 1999 cash crude oil is usually closely in sync with market tops and as it goes higher it caps the ability of the market to move higher.. I believe crude is going up and that will put great pressure on the market and the fed. Inflation will stay above the 2% target. With all of the govt. spending it will be hard to get a slowdown in prices. While there is trouble with commercial real estate and other areas the consumer keeps spending and credit card debt is at an all time high. This is beyond anything the fed can do if the govt. keeps spending. Modern monetary theory works up until it doesn't and that is when the debt can't be serviced. When we can no longer get the debt funded then this is going to unravel and it won't stop no matter how much QE the fed does. Everyone points to history and how things resemble the past and this is a secular bull and I would agree but the one thing that is different than the past is over 34 trillion in debt. We either have to accept inflation that will be horrific for a large portion of our citizens or a complete reduction in spending that will be hard for the American consumer which makes up 70% of our economy. We can't compare the past to a this period because the past never saw over 34 trillion and rising debt.

[@DKellerCMT]

Very interesting thoughts- thanks for sharing! Good call on crude oil D

[@joem2699]

# 3

[@DKellerCMT]

Agreed!! D

[@mjgaz6]

2

[@DKellerCMT]

Mildly Bullish! So far, not bad! D

[@ImNotHereToArgueFacts]

Scenario 2.4-2.6

[@DKellerCMT]

Not bad so far..... D

[@kingxerocole4616]

2 because it’s the most painful for traders and options rule the market now

[@DKellerCMT]

the pain trade is on! D

[@user-bi6kx8ir5g]

Scenario 4- If you look at the cash crude oil chart you will see that the BEAR markets from 2000 on correspond with rising prices in crude oil. The fed will not get inflation to their 2% target because of all of the govt. spending. Also, the consumer doesn't seem to be slowing down even though credit card debt is at all time highs. A lot of this rally from the Oct. lows was built on optimism that the fed was cutting and some thought 6 to 7 times. If they cut now it is because they are fearful. Reality is going to set in soon because modern monetary theory works right up until it doesn't. That point is when the govt. can't finance its huge debt burden over 34 trillion. You can't just print unless someone buys the paper you are printing. So the govt. either has to monetize the debt and inflate its way out which will crush the consumer or raise taxes and hurt businesses and job growth which pulls money out of the private sector to create jobs and provide innovation. Oil prices look like they are going higher and that will kill this market. When you try and compare previous charts and history to the current market there is one factor that is completely different this time and that is over 34 trillion debt that the govt. must pay interest on. It is soon going to become the one single issue that ends this so called secular bull market and the belief that modern monetary theory can go on forever.

[@DKellerCMT]

Not sure about the government debt factor... but agree on annoyingly high inflation data! D

[@nealdaigle894]

I like scenario 2 due to the strong earnings so far! 83% are beating estimates so far, so its hard to imagine a downturn in that environment>

[@DKellerCMT]

This week's earnings may be a serious game changer... AMZN AMD AAPL D

[@surenkhalsa]

Nothing “technical” in this video,sir

[@DKellerCMT]

Lots of other great technical analysis content on the channel- hope you enjoy! D

[@85471538]

3

[@DKellerCMT]

I would agree!! D

[@ChaosDarkLight]

2

[@DKellerCMT]

All about the 50-day moving average this week! D

[@AlexanderSilgidjian]

4

[@DKellerCMT]

* Bear enters the room. * Big tech earnings disappoint this week? May be spot on. D

[@chairman67]

3

[@DKellerCMT]

We are in agreement on this! D

[@cosmosparadox]

3

[@DKellerCMT]

I would agree!! D

[@tavnerdunlap9129]

2

[@DKellerCMT]

Decent start for #2 voters! D