The bulls have roared out of early August lows in one of the smoothest, most powerful V-shaped rebounds in market history. And on Tuesday, after flirting with a close above 2,000 the day before, the S&P 500 finished higher than that level for the first time ever -- albeit by the slimmest of margins at 2,000.02.
It took the index 16 years to cross this threshold after passing 1,000 for the first time since 1998. To refresh your memory, Celine Dion's "My Heart Will Go On" was dominating the airwaves, "Armageddon" topped the movie box office and in the annals of value-destroying mergers, AOL (AOL) bought Netscape for $4.2 billion while Daimler-Benz completed its star-crossed merger with Chrysler.
The S&P crossed 500 back in 1995, 300 in 1987, 200 in 1985, and 100 in 1968.
Three big factors have been propelling the market higher.
For one, geopolitical tensions in Ukraine and Iraq eased -- a dynamic that continues. The white-washed Russian humanitarian convey didn't end up being the Trojan horse many feared. And President Barack Obama, fresh off his vacation, seems determined to keep the pressure on ISIS Sunni extremists in Iraq and Syria.
Also, concerns that the Federal Reserve was set to raise short-term interest rates in the early part of 2015 given strong economic data (particularly on jobs) have faded somewhat as more recent data (on inflation, particularly) has been soft.
Dovish Fed policymakers have capitalized on this to push back against more hawkish members, who were making a lot of noise in late July and early August about the risks of delaying an interest rate hike -- which hasn't happened since 2006.
And the technicals were turning around with market breadth -- or the percentage of stocks participating to the upside -- flashing its first solid buy signal since April.
All still look good for further upside because the market appears to have the momentum and support to keep rising into late September.
Investors remain enamored with comments European Central Bank head Mario Draghi made during his speech at the Jackson Hole shindig for central bankers in Wyoming last week. He cast a more dovish tone about fiscal balances and the need for more stimulus help to push down European unemployment .
And geopolitical tensions continue to cool with a meeting between Russian and Ukrainian leaders containing about as much excitement as two accountants chatting at a cocktail party. Hamas and Israel agreed to another ceasefire as well.
But there's always a but ... after that, a number of new hurdles could stop the party.
First is the likelihood that the Fed ends its QE3 bond purchase stimulus in October, assuming the economy remains robust. Prior periods of no QE activity in 2010 and 2011 were associated with harrowing market corrections.
Any severe acceleration in the economic data, especially inflation, could also bring back the hawkish Fed chatter and once again raise concerns that rate hikes could come sooner rather than later.
And let's not forget that the sure-to-be-contentious congressional midterm elections loom in November.
With a GOP takeover of the Senate the more likely outcome at this point, according to Nate Silver at FiveThirtyEight, we could be on the cusp of a fresh round of budget battles between Congress and the White House. We haven't seen a fiscal showdown since late 2012, and the specter of debt defaults and additional credit rating downgrades won't be good news for investor confidence.
Finally, while the current stock market rebound has been powerful, it hasn't exactly been flawless. Volume has been weak, with Tuesday's rise to a record on the S&P occurring on the lowest volume of the year. The bond market has been less enthusiastic, with high-yield credit basically flat-lining since Aug. 19.
But for now, new opportunities beckon as the more aggressive, more cyclical areas of the market lead the charge higher, including biotechnology, banks, industrials and retail stocks.
New opportunities include National Bank of Greece (NBG), which is getting lifted not only by the general interest in bank stocks right now but by the rebound eurozone stocks are enjoying, thanks to rising expectations of fresh stimulus out of Draghi's ECB. I recommended NBG shares to Edge Letter subscribers early on Tuesday.
Disclosure: Anthony has recommended NBG to his clients.