Is it a breakout on S&P futures index?

Looking at the S&P e-mini futures contracts data, these are daily prices going back all the way to March 1, 2021. The index has broken a trendline that has capped the scope of gains. The index has had many touch-points on this trendline – in July and in August. It is a good sign for the bulls because it was knocking on the level, respecting it and going lower. Now, it has taken it out. If this break will sustain, one will have a situation where one is looking at about 4,600 on the S&P 500.

Is there a pushback to this particular view? Yes. Without going into the macro situation, the valuation, and broader arguments here, some could argue and say that rally has seemed somewhat mechanical in nature given light volumes, the absence of headlines and low summer liquidity conditions globally. Also worth highlighting is market breadth – 51 percent of underlying names in the S&P 500 index actually closed in the red overnight. The same number for the NASDAQ overnight was 58 percent names in the red. That despite the index itself notching new all-time highs.

So, doubts still remain and that is a healthy sign. But many fence sitters may start believing, grudgingly, that the market may not fall in a very big way - as the world's most powerful central bank remains dovish. As for regular corrections and for small corrections, they may be par for the course.