With higher taxes around the corner, a weak job market, and slow economic growth forecasted, we all need to make more money.  Making more money isn’t going to be easy.  We have been spoiled with the dot-com revolution in the late 1990s and then with a real estate boom through 2007.  During each of these 2 eras, we bought stock and profited and/or a house and it increased in value.  Unfortunately, making money is not going to be as transparent as it was for a long time to come.

With that being said, it’s important today for us to shift our attention back to the stock market.  The stock market is the place where you can make the extra cash flow you desire, without committing a large amount of time.

On Friday of last week, the S&P 500 broke a key level and closed above it.  Though I am not ready to call for a new bull market just yet, we could be headed to higher highs if certain technical hurdles can be broken and sustained.

Below is a 1 year chart of the S&P 500.  As you can see the market is in roughly the same spot we were in January.  The market made higher highs up until the end of April and then made 2010 lows at the beginning of July.

Where do we go from here? 

That’s the million dollar question.  If you’ve been watching the business shows on TV or have been reading the financial publications, the opinions on where the market is headed are at opposite ends of the spectrum.  There are experts that see the market tanking in the second half of the year, and others who think we will eclipse April highs.

During times when it is difficult to see “through the forest,” I choose to let the market tell me where we are going.  This is a much more intelligent strategy than trying to follow the opinions of TV commentators who flip flop on their predictions every other day.

On Friday, the S&P 500 broke the 1,100 resistance level it had tested multiple times.  You can see this here on the 3 month chart:

The 1,100 level was tested on July 13th, 14th and 15th.  On Friday the 23rd, the level was finally eclipsed and there has been a continuation higher.  This is bullish but there are still some levels in the not too distant future that we must pay attention to.

The 200 day Simple Moving Average in the S&P 500 is 1,113.70.  As I write this post the S&P 500 is trading at 1,111.  Not only do I need to see this level broken to become more of a bull but I would like to see us close above the level.

The final hurdle I am looking at is the S&P 500 to close above 1,117.  This level is the highest closing level in almost 2.5 months.  

We are halfway through earnings season.  We’ve seen some great reports, some mediocre ones, but not many bad ones.  A pattern we have witnessed for the past 6 months has been when there is low volume, (and I expect there will be very light volume in August)  the market moves higher.  I believe that if we can break the hurdles outlined above, the market will be showing us that it is ready to move higher.  If this happens, I don’t expect a very quick run-up but a slow grind that will have a multi week time horizon.