Unfortunately I don’t have an answer to the title question. But I do have parameters.
After the February mini crash had done its damage to the collective investor psyche we began a “top-test” theme, as sentiment was way over bearish and needed to be fixed. The spike in the VIX rivaled a similar one in 2015 and much like that occurrence it foretold a rally to come. We projected the rally to test the January highs and well, here we are on August 9.
It has been months of repair for the bull psyche interrupted periodically by the Trade War headlines. I think that extended the process. The daily chart of SPX shows that the gap that began the mini crash is now filled and folks, that was our target. So we have been right to be bullish for a top-test but now things get trickier. We enter the realm of prediction and I am not going to go there. If animal spirits ensue this market would likely target 3000 (a measurement based on the daily chart pattern below).
But a failure of tentative support at the gap would start a process of watching support levels as noted, with the most important being the would-be trend killer which includes the SMA 200 and an all-important higher low that if nullified would break the uptrend and signal more than just a hard pullback. It could signal a significant correction (2000-2200 possible). Again, not a prediction, but a distinct possibility if that low is taken out.
VIX is completely different than it was in February. If the massive spike indicated that the market would at some point get it together for a rally the flat out depressed situation in the VIX indicates that should the market move to correct, VIX is absolutely not standing in the way. Indeed, it is constructive for negative events in the stock market, which are not currently expected by the majority.
The stock market is as it has been recently; at high risk. But its trends are all up and I am not going to play the game of trying to out guess a beast of such spirits. But we are at a target that was plotted back when the majority were in a completely different emotional state than today. That in itself means something.