Dow Jones industrial average jump when the market finally breaks out

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The
Dow Jones industrial average
finally broke out of reach to the upside after reports that the US and China had agreed to sit down in October and talk about trade. And that means the next move for the market is probably higher.

The Dow climbed 372.68 points, or 1.4%, to 26,728.15, while
S&P 500
rose 1.3% to 2976.00, and
Nasdaq Composite
gained 1.8% to 8116.83.

All three indices have broken out on the upside, which is good news after about a month of no way. First, it means you don't have to listen to me talking about big daily moves that mean little as long as the market is stuck in its range. But more importantly, it means stocks are likely to rise, at least in the short term.

I'm probably saying because there's still enough to derail the market. Friday's payroll report may be weak enough to restore fears of a recession, or strong enough for the Federal Reserve to reconsider a September interest rate cut. And there's always the possibility that President Donald Trump tweets, which makes us consider the possibility of a trade detention with China.

"Investors must be prepared for the possibility that the first move out of the trade will be a fine one," write Phases & Cycles & David Tippin and Ron Meisels . However, their expectation is that the market will eventually rise higher.

But let's throw caution to the wind. Ever Ross ISI's Rich Ross called the breakout "crucial" and "real", saying that he expects the S&P 500 to hit 3100 sooner rather than later – and not just because of the chart. "More importantly, key evidence of macro-technical improvement across currencies and credit against the backdrop of extreme speed, critical support and negative attitude and positioning, gives me a high level of conviction in this view," he said.

And with 3100 just 4% away, why not?

Write to Ben Levisohn at Ben.Levisohn@barrons.com