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S&P Tops 1,500: Where the Market Goes From Here

The Standard & Poor's 500 crossed the last big, round number between here and a record high, a destination considered inevitable by some Wall Street pros.

Early Thursday trading saw the S&P 500 briefly pass through 1,500, just 65 points shy of its 1,565 record set in 2007.

The index has not traded above 1,500 since Dec. 12, 2007 and hasn't closed there since Dec. 10, 2007, just months before the implosion of big Wall Street banks would send the major averages crashing to decade lows.

While many traders usually dismiss the big, round numbers as having little meaning from a fundamental or technical standpoint, eclipsing this mark could be different. (Read More: Bears on the Brink: 'I Can't Fight It Anymore')

"It's psychological more than anything," said Justin Wiggs, vice president of trading at Stifel Nicolaus. "If we stay above 1,500 it could bring some incremental dollars off the sidelines."

The move past 1,500 comes as investors have been showing more confidence in stocks, finally taking some of the $2.7 trillion lying dormant in low-yielding money market funds and pumping it into equities. Stock-based mutual funds saw $9.3 billion of inflows last week and $23.6 billion over the past two weeks, according to the Investment Company Institute.

"To the degree that those are sticky investments and those dollars stay in equities, that will be a trend we'll be watching here in the first quarter," Wiggs said.

Market veteran Art Cashin, the floor operations manager for UBS, said the mark could be significant as the "bulls need a breakout punch like S&P through 1500."

The 1,500 billboard could become just a signpost along the way if current chart patterns hold up.

"We're already confirmed to go maybe not exactly to the all-time high but pretty darned close," said Abigail Doolittle, technical strategist at Seaport Group in New York. "Depending on how you calculate the targets for these inverse head-and-shoulders (patterns), we're already confirmed for 1,525 to 1,550."

The type of pattern Doolittle referenced involves a pair of price troughs, or bottoming points, with the second trough higher than the first and a breakout following.

That trading behavior has been significant within the context of the Federal Reserve's liquidity programs. The central bank has pumped nearly $3 trillion through its government debt-buying program known as quantitative easing, or QE.

Doolittle has issued bearish calls in the past and still believes the long-term picture of the stock market is troubling, but sees Federal Reserve liquidity driving the market now. Similar chart patterns have appeared during the first two rounds of QE and both were positive for the market - "rock stars," as she put it. (Read More: What Will It Take to Get the Fed to Stop Easing?)

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"It's going to be interesting to see how this plays out. It's unbelievable that the Fed has been able to pull this off," she said. "I applaud them because it hasn't collapsed yet, but I'll be shocked if there's not some severe market action to the downside, very similar to 2000 and 2007." (Read More: Why Stock Market Is 'Going to Hit a Brick Wall')

While the round number are often dismissed, they can prove formidable barriers.

The S&P 500 struggled for three months in 2012 to clear 1,400, but once it did the average zoomed higher. The Dow industrials waged a similar battle with 13,000, and the Nasdaq tech gauge also used a late-year break of 3,000 to climb.

"If it was the first time we were hitting the big, round number it could represent resistance. We've already been through there a couple times," said Mark Arbeter, chief technical strategist at S&P Capital IQ. "The completion of some chart formations suggests we could have measured moves back up towards the all-time highs in the first quarter."

The market's stubborn march higher despite the array of factors against it - weak earnings, political tensions in Washington and a European recession to name three - have market bears feeling fairly helpless.

"This is a very frustrating market," said Kathy Boyle, president of Chapin Hill Advisors. "It's times like this when I feel like throwing in the towel. That's when I feel like I should stick to my guns."

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