Key Trendlines to Watch After S&P 500's New Records

Core Viewpoint - The S&P 500 Index (SPX) has entered a bullish seasonal period, with historical trends suggesting a potential rise in the index during the last trading days of December and early January, supported by a stronger-than-expected third-quarter GDP report [1][3]. Market Performance - The SPX closed at 6,929.94 on Christmas Eve, surpassing its late October intraday high of 6,920, indicating a breakout after previous unsuccessful attempts to clear the 6,900 mark [2]. - The SPX is expected to rise to approximately 6,967.91 by January 5, based on historical performance during the "Santa Claus rally" period, which has averaged a gain of 1.3% since 1950 [3]. Technical Analysis - The SPX's recent breakout marks the second occurrence this year of surpassing prior all-time highs, with the first instance occurring in late June, leading to a sustained upward trend [5]. - Potential resistance is noted at the 7,000 level, which is just 70 points above the recent close, and could act as a psychological barrier as well as an options-related resistance point [8]. - If the SPX fails to maintain its breakout and falls below late October highs, initial support levels are identified at 6,760 and 6,790 [9]. Sentiment and Short Interest - The short interest on SPX components has increased by 2.5% to a multi-year high, indicating a sentiment that could fuel further rallies if a breakout is sustained [12]. - Total short interest is up 45% compared to the 2024 close, suggesting a highly shorted market that may lead to short-covering rallies or brief pullbacks as shorts cover losing positions [13].