The S&P 500 Is at Record Levels. But Some Analysts Aren’t Ready to Celebrate a Breakout Yet

The S&P 500 has climbed back to record territory, but technical analysts on Wall Street say investors should resist declaring victory until the benchmark clears one critical hurdle of several decisive daily closes above a certain number.

After rebounding to fresh highs on Tuesday, market strategists are closely monitoring the 7,620 level, which represents the index’s previous record from early June. While the S&P 500 topped 7,700 for the first time, analysts say a sustainable breakout will require more than a brief move above resistance.

According to technical analysts interviewed by CNBC, the benchmark needs to post several decisive daily closes above 7,620 before investors can confidently conclude that a new uptrend is underway. Until then, they caution that the market remains vulnerable to renewed selling pressure despite its recent strength.

Katie Stockton, managing partner at Fairlead Strategies, told the outlet that confirmation is the missing piece before treating the latest rally as a genuine breakout. “We would just make sure before acting upon this rally as a breakout that it is confirmed,” Stockton said. “It wouldn’t take much to confirm it for the S&P 500. We just want to see a couple of decisive and consecutive closes above the 7,620.”

The benchmark index previously closed at 7,609.78 on June 2 before retreating, making that area an important technical resistance level. A convincing move beyond it could improve the market’s outlook heading into August, traditionally one of the weaker months for equities.

Seasonal headwinds have historically made August a challenging period for stocks. However, analysts believe a confirmed breakout could help the market overcome that pattern, particularly if investors continue rotating back into technology giants and other growth-oriented sectors.

That shift already appears to be gaining momentum after stronger-than-expected quarterly earnings from Amazon and Microsoft boosted confidence in the artificial intelligence trade. The results helped reignite enthusiasm for the mega-cap technology companies that have driven much of the market’s gains over the past two years.

Investors also appear increasingly confident that last month’s turmoil surrounding Situational Awareness, the hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, represented a temporary disruption rather than the beginning of a broader downturn.

The fund’s forced unwinding of major AI-related positions briefly rattled markets, but many investors now view the episode as a clearing event that removed excessive speculation.
The recovery has already lifted several technology-focused investments.

The Roundhill Magnificent Seven ETF (MAGS) has gained nearly 4% so far this month after advancing 2.6% in July, reflecting renewed interest in the largest technology companies.
Ari Wald, head of technical analysis at Oppenheimer, remains constructive on technology if the breakout is confirmed.

“Our top areas are going to remain technology,” Wald told CNBC. Beyond software, Wald also favors capital goods within the industrial sector, pharmaceuticals, biotechnology, major banks, brokerage firms and oil refiners. He believes those industries could continue attracting investor interest as the market broadens beyond a handful of mega-cap names.

Semiconductor stocks could also benefit if the rally strengthens. The iShares Semiconductor ETF (SOXX) fell more than 20% during July as investors locked in profits after an enormous run. Even after that pullback, the fund remains roughly 80% higher for the year, suggesting long-term momentum remains intact despite recent volatility.

Not everyone expects technology to dominate the next phase of the rally. Paul Hickey, co-founder of Bespoke Investment Group, believes the equal-weight version of the S&P 500 may outperform as leadership expands across more sectors.

Rather than relying on a small group of technology giants, Hickey expects broader participation from financial stocks and consumer discretionary companies, citing resilient consumer spending even as oil prices remain elevated.

“We’ve seen broad-based strength in small-, mid-, large cap stocks,” Hickey said. “It’s basically an adaptation of that Oprah Winfrey, where she said, ‘you get a car, you get a car.’ It’s every stock is, ‘you get a rally, you get a rally.’ This moment, right now, things are rallying.”