05/25/2026
The S&P 500 has posted 8 consecutive weeks of gains, something last seen in late 2023. On the surface, that looks like a healthy, confident market. But where price sits right now deserves a closer look.
What Drove This Rally?
When geopolitical tensions in the Middle East escalated earlier this year, most expected markets to sell off sharply. They did not. Investors kept their focus on corporate earnings, which have largely come in strong, and continued buying. We saw the same pattern during the early stages of the Ukraine conflict. Earnings tend to win against headlines, at least in the short term.
Additional optimism has come from expectations of a US-Iran deal and the potential reopening of the Strait of Hormuz, which would ease energy supply concerns and further reduce geopolitical risk premiums baked into markets.
Where the Market Stands Now?
The index is now approaching a resistance zone that has rejected price on multiple occasions over the past year. This is the kind of level where markets tend to make a clear decision.
Two paths are in play:
If buyers hold and push through, fresh all-time highs could trigger another leg higher as momentum-driven capital chases the breakout.
If the market stalls here, the first meaningful support sits in the 7,000 to 6,900 range. A deeper pullback would bring 6,600 to 6,500 into focus, which is a zone that previously acted as strong support.
What to Watch This Week?
Two data releases could determine which path plays out.
Tuesday brings Consumer Confidence numbers. Consumer spending accounts for the majority of US economic activity, so any softness there would raise questions about whether earnings growth can be sustained.
Thursday brings PCE inflation data, the Federal Reserve's preferred inflation measure. If inflation comes in above expectations, it reduces the likelihood of near-term rate cuts, which would put pressure on valuations at a time when the market is already stretched.
A calm market sitting at a key resistance level, right before two market-moving data releases, is a setup worth monitoring carefully regardless of your time horizon.
The question worth asking is whether the current optimism is priced in or whether there is still room for the rally to extend.