As the benchmark S&P 500 attempts to shake off recent bearish sentiment triggered by emerging trade tensions, technical indicators suggest that the index is on the verge of a notable rally.
Specifically, the index is flashing bullish signals after what appears to be the conclusion of its recent consolidation phase.
It has been moving within a rising channel since October 27, 2023, low, with historical trends indicating that another breakout may be imminent, according to an analysis by TradingShot shared on February 11.
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The expert pointed out that the S&P 500 has spent the past month consolidating around the 50-day moving average (MA), a pattern observed three times before within this channel. Each of those instances led to a rally of at least 15%, and the analyst believes the market is now positioned for a similar move.
At the same time, a possible bullish continuation is backed by momentum indicators, including the Relative Strength Index (RSI), which has formed a bottoming pattern similar to previous breakout points.
S&P 500’s 6,600 target
Every time the S&P 500 recovered from a bearish leg below the 50-day moving average, it consolidated for about a month before resuming its upward trajectory. If this historical pattern holds, the index could soon gain momentum and push toward the projected target of 6,600, according to TradingShot.
This level would mark a new record high, though the expert provided no specific timeline for reaching this milestone.
Indeed, several Wall Street firms have supported this bullish outlook, which foresees the S&P 500 hitting new highs in 2025. For instance, Wells Fargo (NYSE: WFC) has set a target of 7,000, while HSBC projects the index will reach 6,700 before the year ends.
On a more optimistic front, Oppenheimer’s chief investment strategist, John Stoltzfus, projects the index climbing to 7,100 by the end of 2025.
Overall, the benchmark index paused its bullish run in recent weeks due to emerging trade tensions and a market sell-off triggered by developments in artificial intelligence (AI), particularly the threat of DeepSeek AI on revenues of entities such as Nvidia (NASDAQ: NVDA).
S&P 500 crash potential
Meanwhile, lingering concerns remain about the index’s continued ascent. Some experts, such as economist Henrik Zeberg, have warned that investors should anticipate a potential sustained rally, which could ultimately lead to a historic market crash.
These crash concerns intensified when the index at one point erased $2.5 trillion in a single month, as reported by Finbold on January 13.
Currently, the S&P 500 is experiencing short-term weakness as the market remains on edge ahead of the release of Consumer Price Index (CPI) data, which will influence the Federal Reserve’s next interest rate decision.
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