Todd Gordon, a long-time stock analyst and the founder of TradingAnalysis.com, is “nervous” about the current state of the S&P 500. The index crashed just before Christmas to below 2350, but has affected a steady recovery in the meantime. By press time it had gained 2% on its numbers 3 months ago.

Gordon tells CNBC in a recent interview:

The 200-day moving average right here — we have tried it once, twice, three, coming back on a fourth time. This is going to be a deadly battleground. I want to short it but I want to be very diligent and get a good price, stop out above 2,900, but again, don’t think is going to be an easy trade. I think we sell off but it’s going to be very volatile for a period while we decide what to do here.

Can We Expect 3,100 in 2019?

His lack of confidence in a short might put some wind in the sails of the longs out there. However, let’s look at a longer track-record for SPX.

As we can see above, the index has only reached a high of around 2920 over the past year. The current level is also a 2% gain on where it was a year ago. If SPX is in another bull run like it was last summer, new highs could be seen. The gain over the average in the last run was 200 points. Could we thus expect a run to 3,100 before bulls might be considered overconfident?

The value of the SPX is based on the performance of the 505 symbols it represents. While Silicon Valley has been doing well, a lot of other blue chip companies that make the list are posting profits in the single percentage range. The jury is still out on the trade war with China, which will affect companies across the board.

China Policy Will Play Major Role

Therefore, Gordon is right to be “very nervous.” The S&P 500 does poorly when major companies falter, and in terms of profits, 2018 wasn’t impressive for non-technology companies. However, companies like Amazon, Apple, and Alphabet posted respectable revenues which offset the consequential market capitalization punishment suffered by underperformers.

Yet two of the above-mentioned companies rely very much on revenue based on trade with China, revenue which can be negatively disrupted in 2019 by foreign policy decisions.

Another analyst named Erin Gibbs isn’t expecting a slingshot motion on the S&P 500. A portfolio manager for S&P Global, Gibbs projects a little under 5% gains over the course of the year. Barring some surprise movements in the wider economy, this prediction is probably safer to trust. Near-term shorts to the 2650 range might not be out of the question for many traders.

Of course, this column isn’t intended as financial advice. Make your own decisions wisely. If you’re playing the indexes, let’s hope you’re paying attention to macro economic policy, as that will play heavily into the valuation of the companies within.