The S&P 500has been churning since mid-January and hasn’t made a meaningful move since October, creating a ticking-clock moment that I’ve seen play out many times over my 30-year career.
Sideways churn only lasts so long, suggesting the benchmark is near an air pocket that could resolve with a breakout to new all-time highs above 7,000 or a breakdown, as we’ve already witnessed with some former-AI darlings, including Palantir.
The market action has been defensive, defined by locking in gains on rallies to the psychological 7,000 level to reposition into underweight baskets and reduce risk from geopolitical drama and tech-heavy profit-taking.
Veteran analyst Bob Lang has been tracking markets since before the Internet boom and bust. He’s seen plenty of market pops and drops, and his number crunching suggests that a major move is looming as the clock to eclipse 7,000 counts down.
The S&P 500 has marked time between 6,700 and 7,000 for months as investors, boasting portfolios already packed with technology stocks, have booked profits and turned attention to lagging sectors that perform better in the late stage of the business cycle.
The shift has been palpable. The SPDR Energy Select ETF (XLE) and SPDR Healthcare Select ETF (XLV) are up 13.6% and 8.3% since October, while the Roundhill Magnificent Seven ETF (MAGS) has lost 3%.
Related: Billionaire Dalio sends 2-words on Fed pick Warsh
In short, investors have embraced previously unloved stocks and pressed pause on big-cap technology stocks that drove most of the market’s rally from the lows in 2022’s to last fall.
“In times of market stress, the S&P tends to outperform the more high-beta Nasdaq. The S&P clearly has more so-called stodgy names in it, like the staples or the drugs,” reminded longtime technical analyst Helene Meisler in a TheStreet Pro post.
The fact that the market’s tenor over the past few months has set the stage for a breakout up or down isn’t lost on Bob Lang. Lang, who is also a technical analyst, has been watching the market action closely, and he thinks time is running out for the bulls to mount a push in the index to new highs.
“The problem for the bulls lies in refusal to make a higher high,” said Lang on TheStreet Pro. “The bulls are running out of energy and could be subject to more violent swings like we had this past week.”
We’ve certainly seen some violent moves recently, notably in the red-hot gold and silver markets, which took a beating on January 30. The SPDR Gold Shares ETF (GLD) and iShares Silver Trust (SLV) fell 10% and 29%, respectively.
“Money flows freely in markets from asset to asset and if one is not moving the capital will be emptied out in a hurry. You all saw that happen with gold and silver,” said Lang. “Could this happen to the S&P 500?… Remember, if stocks are not going up, they are probably going down.”
Lang notes that a number of technical indicators are putting pressure on bulls to mount a rally that pushes the S&P 500 to new all-time highs.
-
Stochastics (momentum) are turning lower.
-
Money flow is making lower highs and lower lows.
-
MACD (moving average convergence divergence) has been on a sell signal since mid-November.
Those technical signals suggest higher risks, which is also backed up by the volatility index, or VIX, which rose six consecutive days leading into the weekend.
The stakes, in short, are high for bulls to eclipse the 7,000 psychological hurdle, and then hold it. The last time we tested 7,000 was Jan. 28, and markets quickly retrenched.
More Wall Street
Still, on February 2, as of last check, the S&P 500 is rallying and the VIX has retreated to last week’s lows as investors make a stand. If the market reverses again, it would likely frustrate many, further adding to risks of a retreat.
My takeaway: As my mentor used to love saying back in the late 1990s, “Stocks go up, stocks go down.” While stocks go up and to the right over time, they endure their fair share of pullbacks, corrections, and bear markets along the way.
As a result, most investors shouldn’t let short-term moves derail long-term plans. After all, earnings are the lifeblood of stock market gains, and so far, fourth-quarter earnings are bullish.
“With 50% of EPS in, the S&P is on track to grow 11% YoY in 4Q,” wrote Bank of America analysts in a note shared with me today.
That profit momentum, Wall Street widely expects, will continue. Investment banking powerhouse Goldman Sachs predicts S&P 500 earnings will grow 12% this year.
“The outlook for S&P 500 EPS growth in 2026 remains solid. Of the 50 companies offering 2026 EPS guidance, 54% of firms have guided above consensus compared with the historical average of 40%,” wrote Goldman Sachs analysts.
Still, active investors ought to watch the market closely this week to see whether the S&P can break out to a new high or whether it will retreat from 7,000 again. Regardless, it’s a good time to review your portfolio to make sure that you’re not overexposed if stocks roll over.
Related: Fidelity fund manager’s outlook resets recession bets in 2026
This story was originally published by TheStreet on Feb 2, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.