New Highs Are Back on the Table

What We Said. What Happened.

Two weeks ago, this newsletter identified 6,654.99 as the trigger level for the S&P 500. The call was direct: a daily close above that number would confirm that near-term selling pressure had been absorbed and a recovery was underway. The next target would be the 6,880 range. We also flagged April 17 as a timing window to watch for a potential near-term high.

The S&P 500 closed above 6,655 on April 8. It did not look back. By last Friday, the index had traded as high as 7,147 — more than 260 points above the 6,880 target. The April 17 timing window coincided with a brief intraday pause before the market pushed to its weekly high. Scenario A, the recovery thesis, played out in full. The bear case never triggered. The March low at 6,316 now stands as the base of a confirmed new advance.

Two weeks ago, the S&P 500 was labeled a bounce. A countertrend rally. The kind of move you sell into, not chase. That framing just changed.

Last week, the index gained more than 300 points in five trading sessions. The cumulative rally from the March low of 6,316 now stands at more than 800 points. That kind of magnitude, sustained over that kind of timeframe, does not happen in corrective markets. It happens in markets that have turned.

The intermediate-term trend has now flipped bullish for the first time since the January peak. That is the single most important development to understand heading into this week. The market is no longer fighting its way back. It is leading higher.

What Changed and Why It Matters

The shift was not random. Three forces aligned to drive last week's breakout.

First, tariff clarity. The Trump administration's 10% global tariff framework is lower than what markets had feared and, crucially, the US-China arrangement struck in late 2025 remains in place. That deal, which runs through November 2026, keeps Chinese tariff rates at 49% rather than the higher levels that had been threatened. Markets had spent months pricing in a worst-case trade outcome. When that scenario did not materialize, equities repriced quickly.

Second, earnings season. First-quarter results are beating expectations at an above-average clip. Year-over-year earnings growth for S&P 500 companies is running near 13%, with the largest technology companies growing closer to 23%. Forward profit margins are at new highs. This is not a market being propped up by sentiment alone. The underlying fundamentals are confirming the price action.

Third, the peak fear around the Strait of Hormuz situation appears to have passed. Oil spiked on the news, the dollar firmed, and for a few sessions markets looked as though they might roll over again. They did not. The market's ability to absorb a geopolitical shock and push to new recovery highs is itself a bullish signal.

Where the Market Needs to Hold and Where It Needs to Go

The S&P 500 closed Friday near 7,126. That puts it roughly 200 points below the first meaningful layer of resistance at 7,316. A clean break and close above that level would be confirmation that the next leg of the rally is underway. It is not a guarantee of anything — but it clears the immediate ceiling and opens the path toward the summer targets.

On the downside, weekly support sits near 6,958. As long as any pullback holds above that level, the trend structure remains intact. A close below 6,958 would not end the move, but it would slow it and suggest the market needs more time before taking out 7,316. Think of it as a range: buyers control the tape above 6,958, and sellers regain short-term leverage below it.

The bigger-picture targets remain in the 7,600 to 8,000 zone. That is where the current trend is expected to crest, most likely in the late July to mid-August window. From that peak, the picture changes — a sharp pullback of 17 to 30 percent is projected into October, leading to what the longer-term framework identifies as a major accumulation low. That autumn window is still the most significant setup of the year. But to get there, the market has to finish what it started in March.

The March low at 6,316 is the line in the sand for the entire advance. A close below that level would require a complete reassessment. For now, it is a distant reference point, not an active concern.

Geopolitics and the Dollar This Week

The setup already favors strength. Geopolitics is the narrative the market will use to justify what the price action is already set up to do. The Strait of Hormuz situation has not resolved, but the market has shown it can absorb that risk. Watch for any escalation in the Middle East that sends crude back above $100 per barrel. That would introduce real inflation pressure and put the Fed in a bind, which is the one macro scenario that could derail the current advance before it reaches 7,316.

The US dollar has been firming on the back of higher oil prices and a hawkish Fed. A stronger dollar is a headwind for gold and for multinational earnings. Gold's behavior this year has been unusual. Despite geopolitical stress, the metal has underperformed as emerging-market central banks sold bullion to defend their currencies. Watch gold as a real-time gauge of geopolitical tension. If it starts rallying sharply again, it signals the market's fear premium is re-engaging. If it stays contained, the risk-on trade has room to run.

Earnings Season and the Economic Calendar Ahead

This week is the peak of first-quarter earnings season. The largest technology companies report over the next several sessions. Guidance matters more than the backward-looking results. Investors want to know whether tariff costs are being absorbed or passed through, whether AI capital spending is still accelerating, and whether consumer demand is holding up. Any negative surprise in forward guidance would be the single most likely trigger for a pause in the rally.

Looking further out, two data points dominate the macro calendar. Core PCE for March is due at the end of April. The Fed's preferred inflation gauge has been stuck above its target, and with oil prices elevated from the Strait of Hormuz situation, the risk is skewed toward a hot print. A reading that comes in above expectations would reduce the probability of any rate cut this year, which is already near zero in futures markets. Beyond PCE, the first quarter GDP estimate lands before month-end as well. Consensus calls for modest growth, but downside risk from the trade uncertainty earlier in the quarter may have clipped activity more than expected. The Fed meets in early May. No rate action is expected. What the statement says about the inflation-versus-growth tradeoff will set the tone for summer.

Where the Bull Case Breaks Down and Where It Accelerates

Scenario A — The Rally Continues. The S&P 500 holds above 6,958 on any pullback this week and pushes through 7,316 on a closing basis in the weeks ahead. Earnings guidance is broadly positive. PCE comes in near consensus. The market runs toward all-time highs and eventually targets the 7,600 to 8,000 zone by late summer. This is the base case given current trend conditions. Near-term weakness that holds above 6,958 is simply the market catching its breath before the next push higher.

Scenario B — The Advance Stalls Here. Price fails to break above 7,316 on a clean close. A hot PCE print or negative earnings guidance from a major technology company triggers a pullback below 6,958. The market enters a consolidation phase into late May or early June before the next attempt higher. This would not be the end of the trend. It would be the mid-cycle pause that is statistically normal in moves of this magnitude. The summer targets remain intact in this scenario. The difference is timing, not direction.

The scenario that ends the bull case entirely is a close below the March low at 6,316. That is not the current probability. But it is the level where the entire framework changes and the autumn 2026 low becomes the next meaningful opportunity rather than a secondary event.

What to Watch, and How to Think About It

1. Watch 6,958 as weekly support. A hold there keeps the intermediate uptrend intact. A close below shifts the near-term bias to sideways, not bearish.
2. Watch 7,316 as the resistance that matters. A clean weekly close above this level signals the next leg is underway and targets the 7,600 to 8,000 zone into summer.
3. Watch earnings guidance more than earnings results. The backward-looking numbers are already strong. What the market needs to see is confidence in the forward outlook, particularly around tariff costs and AI spending.
4. Watch Core PCE at the end of the month. This is the number the Fed watches most closely. A hot print above consensus tightens the financial conditions narrative and reduces the market's upside runway near-term.
5. Keep the autumn 2026 low in mind. Whatever happens between now and then, a major cycle low is projected for October. If the market continues higher into summer as expected, that autumn window becomes the defining opportunity of the year for longer-term positioning.