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S&P is having its best quarter since 2009, and history points to another surge

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As S&P 500 tracks for best quarter in a decade, what comes next?

The is on track for its best quarter in a decade, up roughly 12 percent. And if history is any indication, the index could be set for more gains for the rest of the year.

In nine of the 10 previous times since 1950 that the S&P returned more than 10 percent in the first quarter, it went on to post double-digit gains for the year, according to LPL Financial's Ryan Detrick. The one exception was 1987, when the market crashed on Black Monday.

Despite the track record, S&P Global's Erin Gibbs and Instinet's Frank Cappelleri believe the S&P still has a number of hurdles to surpass before it can move meaningfully higher.

Gibbs points out that this quarter's strong surge is different from prior examples: Rather than being an extension of fourth-quarter strength, this time stocks limped into the new year after sliding at the end of 2018. So the index is just recovering lost ground, she said.

"We still haven't even recovered from the carnage that we just went through in the fourth quarter, so I think this is still really reclassified as more of a rebound rather than a continuation of an uptrend that we saw in all those other years," Gibbs said Tuesday on CNBC's "Trading Nation."

"So I'm really hesitant in forecasting being up another 20 percent or 25 percent when you combine that with the high valuations as well as less than 3 percent profit growth expected for this year," she added.

After looking at the charts, Cappelleri argues that the S&P has been stuck in a range. He doesn't forecast new highs until the index can materially break — and hold — above the key 2,800 level, which has provided resistance in the past.

"Before we can talk about extension for the rest of the year, we need to get through 2,800 first," he said in the segment. "By my count it's encountered this level or this area near 2,800 now 12 times since the beginning of 2018, and I know back then it marked a key breakdown point twice in January, and again in October. … It's in rebound form now. And so we still need to get through that point."

Putting the S&P's struggle to move higher in historical context, Cappelleri argues that this is the fourth failed major topping pattern since 2009. The charts exhibited similar patterns in 2010, 2011 and 2016, when the S&P broke below a key support line, before ultimately surging to new highs.

So while Cappelleri thinks that ultimately the chart's pattern shows a rally could be ahead, he says the index won't make new highs until it can hold that key 2,800 level.