It’s hard to be bearish here.

Yes, I know there’s a trade war brewing. There are international conflicts and political turmoil. Inflation appears to be heating up. Our deficit is way out of control. Interest rates are rising. And June is typically a poor month for the stock market – especially during years in which there’s a mid-term election.

But outside of the potential for a brief, short-term pullback, the stock market looks to me like it wants to go higher.

Take a look at this daily chart of the S&P 500…

The market started a bullish move in early May when the S&P 500 popped above its 50-day moving average (the squiggly blue line) and the downtrending resistance line (the solid blue line). The index has spent the past four weeks chopping back and forth in a relatively tight trading range – which has allowed the various moving averages to move into a bullish configuration.

The 9-day exponential moving average (EMA) is above the 20-day EMA, which is above the 50 day MA. This sort of a setup usually leads to higher prices.

The S&P is running into resistance right here near the 2741 level. And conditions on the intraday charts (not shown) are overbought. So, perhaps we’ll get a brief pullback over the next few days. Traders, though, should use that pullback as a chance to buy.

If the S&P 500 can then rally above the 2741 level, then the next resistance is the March high at 2780. And above that level, we’ll be looking at a potential move to new all-time highs.

I suspect that’s where we’re headed between now and the end of summer. And that may be the final rally we get out of this nine-year-old bull market.

So, yes… there are plenty of reasons to be bearish going out several months from now. And there are reasons to suspect the next few days might get a little rough as well.

But it looks to me like the market is setting up for a bullish summer.

Best regards and good trading,

Jeff Clark

Reader Mailbag

Today, readers express their thoughts on last week’s Friday Mailbag issue…

Your answer to the criticism of Catholic and repressed emotions was spot-on (I am Catholic by the way). I totally agree that, for some reason, our society is now ultra-sensitive. I was on a weekly conference call with 15-25 people and I had many tell me my humor is what made it bearable. The “always serious” approach to life is bad for your health as well. Keep it up – I like the humor.

– Glenn

Jeff, I 100% agree! We need a greater ability to be able to express ourselves and not have everyone looking for a transgression when considering the context none was intended. Please laugh at something today and not feel guilty!

– Rick

Hi Jeff, It’s been a blast following your market insight over the past two years. Thank you. I hope you can continue to add some humor to my day despite those out there that find slight in everything. But I do draw the line at talking about hair loss, have you no limits?

– Bret

One of the most important qualities that a good father needs is a good sense of humor that allows him to laugh at himself. He will have a much stronger relationship with his children through the years. They will listen to him, trust him to always love them gently, and learn to laugh, love, and live successfully as parents themselves. My kids are always calling me and inviting me to come visit even though they are busy. We laugh a lot. Their kids are happy and emulate their parents.

It takes a strong, self-confident man to be able to laugh at himself. Keep it up! The world needs us.

– William

Thank you, as always, for your thoughtful insights. Keep them coming right here.