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If the S&P 500 hits this level, it could signal a market top

Here's how far the S&P 500 can run before hitting a wall
Here's how far the S&P 500 can run before hitting a wall

Stocks' record run has hit a wall over the Independence Day holiday stretch.

The and Dow retreated for a second trading day in a row Monday after a massive advance in June.

The markets could still have more room to run before hitting their next level of resistance, said Mark Newton, technical analyst at Newton Advisors.

"We certainly have stretched the upper end of it. But I do think we can make a bit more progress over the next four to six weeks," Newton said Friday on CNBC's "Trading Nation." "I'm still bullish on the S&P. I think we likely get up to 3,040 to 3,070 or so before we stall out."

The S&P 500 would need to rally another 3% to reach the upper end of that range at 3,070. Any move over 2,996 would mark an all-time high.

Lagging sectors joining in on the recent move higher also give Newton hope that the rally can continue through the summer.

"You look at financials starting to participate. That's a big plus for stocks being that they're almost 13% of the S&P. Health care and transports have also been coming back so those are all encouraging signs," Newton said. "Near term I do think it's right to bet on higher prices in July and into August before we see any real slowdown," he said.

Mark Tepper, president of Strategic Wealth Partners, said easing monetary policy should support the stock market this year, even if the Federal Reserve does not come out quite as dovish as expected.

"The market was basically expecting a 50 basis point cut this month, it's probably going to be more like 25 basis points so I do believe the Fed is going to cut so the cut is not off the table. It's just probably going to be a little bit smaller," Tepper said during the same segment.

A strong June jobs report released Friday tempered expectations for multiple rate cuts this year. The current chances of a 25 basis point rate cut at the July meeting sits at 93%, according to CME Group fed funds futures.

"The market is going to trade sideways and range-bound through the rest of the year so what should you be doing as an investor? I think it makes sense to have dry powder if you have it. So identify companies where you really like their long-term story, you believe in their long-term thesis and you identify any pullbacks and when those stocks pull back you buy them at entry points that you think are attractive," Tepper said.