With no major economic data on the horizon thanks to the ongoing government shutdown, and with bearish catalysts thin on the ground, Wall Street’s steady climb continues. The S&P 500 futures briefly touched fresh highs overnight before easing slightly. The question now is whether the rally still has legs as we move into earnings season. So far, investors have brushed aside warnings of a potential bubble in tech stocks, betting that the sector can once again deliver the kind of results that justify lofty valuations. Hopes of two more Federal Reserve rate cuts in 2025 have also helped offset concerns about a cooling labour market. The S&P 500 forecast remains positive, but let’s see if upcoming earnings will keep it that way.
Markets keep climbing on lack of bearish news
The way markets are grinding higher suggests investors remain convinced that this rally can keep going in the absence of any obvious bearish trigger. With the government shutdown limiting new economic data, the Fed has little reason to deviate from its expected rate-cut path, and that means traders have little incentive to dump equities just yet.
Some light profit-taking is understandable ahead of earnings season, but sentiment is still broadly positive. Active traders continue to buy the dips, keeping momentum alive. You can see this in the shallow retracements and the steady string of record highs across the major indices. In this environment, looking for bearish setups feels counterintuitive – the market simply isn’t giving short-sellers much to work with.
Earnings season takes centre stage
Attention now turns to the upcoming earnings season, which could be pivotal for validating the AI-driven optimism that’s powered much of this year’s rally. The early reports will start trickling in tomorrow from names like PepsiCo and Delta Air Lines, followed by the big banks next week – Goldman Sachs and Citigroup among them. But it’s the heavyweight tech names later in the month that are likely to have the biggest influence on the S&P 500 forecast, determining whether the index can maintain its record-breaking run or finally pause for breath, or even correct.
Technical S&P 500 forecast and trade ideas
From a technical standpoint, dip-buying remains the dominant strategy. On our US S&P 500 chart, derived from underlying ES futures, the 6698 level – a key resistance back in September – has flipped into support and held up firmly through several retests from above this week. Yesterday’s rebound from that level propelled index futures to another record high before easing a little. That feels like a brief consolidation before another potential push higher. Could we see 6800 today? But why stop there?
The next significant target sits near the 7000 mark on S&P 500 chart. Not only is it a round psychological number, but it also aligns neatly with the 161.8% Fibonacci extension drawn from the February downswing, landing around 6980.
Meanwhile support levels to watch below 6698 include 6650 and then 6,500.
Momentum indicators, however, are showing stretched readings. RSI levels across multiple timeframes are flashing overbought signals – daily above 70, weekly around the same, and monthly near 75. The last time we saw such extended readings was in late 2024 and early 2025, just before the market paused for a healthy correction.
These signals don’t necessarily point to an imminent sell-off, but they do suggest that markets may need a breather – either through sideways consolidation or a modest pullback. The former is what the bulls would like to see. After six straight months of steady gains, a bit of cooling wouldn’t be unusual.
Don’t fight the trend
For now, though, the underlying message remains the same: the trend is your friend. Unless something fundamentally shifts – such as weak earnings or a major macro shock – traders seem content to stay long. So, the takeaway from this S&P 500 forecast is straightforward: momentum remains on the bulls’ side. If you’re already long, there’s no reason to panic. If you’re not, patience may be the better play – wait for a pullback, then consider buying the dip.
-- Written by Fawad Razaqzada, Market Analyst
Follow Fawad on Twitter @Trader_F_R
