Charts: S&P Upside Potential is Limited

Investors have cheered any sign that a recovery is not far and waves of optimism have been sweeping the markets lately, but although the recent rally still has legs, upside potential is limited, Royce Tostrams, technical analyst at Tostrams Groep told CNBC.

“We see some improvement because the falling trend has been broken and we have formed a series of higher bottoms in the past few weeks, however, upside potential is limited,” Tostrams said.

Using technical analysis he explained the trend the market is following.

"The first target for the index is 878, while the second target is about 944. For the next three to six months, I expect a new sideways movement between 700 and 900. This would not be a new bull market, but it would be a sideways market," he added.

"Investors have to be very selective to get some gains, but they can't stay in the market too long because upside potential is limited," concluded Tostrams.

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