How far can the S&P 500 rise? Not as much as the technicians will tell you.

It has become evident to technical analysts that the stock market has staged a convincing upside breakout, writes Cam Hui from the Pennock Idea Hub. Not only has the major global averages broken out to the upside, the monthly charts of selected indices have flashed MACD buy signals. Hui says that in the past, such buy signals have indicated significant price gains, with only minor downside risk. Hui is skeptical, perhaps more measured in his assessment. He estimates targets using a variety of technical and fundamental techniques, and has arrived at some different answers. For instance, he found that price targets derived from technical analysis are highly ambitious and they call for upside potential of 25% or more. By contrast, valuation and longer-term projections point to highly subdued return expectations. Indeed, his Third Way scenario postulates that the S&P 500 could see a price appreciation potential of 10–13%, or 3380–3480 before suffering a downdraft of unknown magnitude.