The S&P successfully broke through a key technical level (1,130) and managed to close above it for the first time since May. I believe we will continue marching higher with the next key resistance at 1,150 followed by 1,170. While 1,150 will be a difficult test, I think we will most likely break it and test 1,170 before the end of the month. Besides technicals, I believe there are other reasons behind this bullish run. First, from a sentiment perspective, people were simply too bearish, driven by weaker economic data and European debt worries. Second, dividend yields (2%-3%) are attractive given record-low interest rates globally as major developed countries such as the U.S. and Japan have kept their rates near zero. While it is difficult to predict equity prices in the longer term, the worst is probably behind equities this year.
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