The S&P 500 has closed within a 100-point range for about the last month, but the continued strength in technology stocks should finally drive it higher, Mark Newton of Newton Advisors predicted Wednesday on CNBC.
"If S&P breaks above 2,940, that's the key resistance, we might get up to 3,050, 3,075," Newton, founder and president of Newton Advisors, said. "That's really my target."
The technical analyst said his predictions are rooted in the strength of technology stocks, which he noted are 22% of the companies in the S&P 500.
"Almost a quarter right now of the S&P is technology," he said. "Until we see some evidence of technology breaking, this is still going to serve as a tail wind for stocks."
On Wednesday, the Technology Select Sector SPDR Fund, an exchange-traded fund tracking the S&P 500′s tech and telecom stocks, rose 1.7% to 79.9. It is inching closer to its 52-week high of 82.78 in July, Newton said.
In particular, Newton said Apple is the key to the whole puzzle. He said technical analysis of the company's stock performance, which includes a recent uptick after an early August decline, looks promising.
About 80% of the time, patterns like this — which form a symmetrical triangle — are followed by "movement to the upside, not the downside," Newton said. That is a main reason he sees continued strength out of the tech stocks, he said.
Additionally, overall investor sentiment is likely to be improved by news out of Hong Kong that a controversial extradition bill is being fully withdrawn and expectations for another interest rate cut from the Federal Reserve at its September policy meeting, Newton said. The Fed lowered rates in July for the first time in a decade.
"I expect that sentiment will start to get more and more bullish," Newton said. "If that happens towards the Fed meeting, that would be a time to sell into this. But right now, it's really right to bet on this 2,940 being exceeded in my view."