Stocks continue to trade sideways - will tomorrow’s FOMC release provide direction?
Despite uncertainty amid escalating tensions in the Middle East, the S&P 500 Index advanced on Monday, closing 0.94% higher. It moved back above the 6,000 level, essentially continuing its short-term consolidation.
In my opinion, this remains a short-term consolidation, with no confirmed bearish signals at this moment. Beyond the Middle East conflict, investor attention is now turning to tomorrow’s key FOMC interest rate decision. As of this morning, the S&P 500 is expected to open 0.2% lower, likely continuing its consolidation.
Investor sentiment has recently improved, as reflected in last Wednesday’s AAII Investor Sentiment Survey, which reported that 36.7% of individual investors are bullish, while 33.6% are bearish.
The S&P 500 continues to hover around the 6,000 level, as the daily chart shows.
S&P 500 Futures: Moving Sideways
This morning, the S&P 500 futures contract remains above the 6,000 mark, continuing its short-term consolidation. The resistance level is around 6,100-6,120, marked by local highs, while support remains at 6,000.
Overall, this appears to be a flat correction within an uptrend.
Conclusion
Last week’s pullback failed to trigger a deeper correction, as the S&P 500 retraced Friday’s decline with a strong rebound on Monday.
Markets are now awaiting a series of key economic data releases this week, including the FOMC monetary policy update tomorrow. With a holiday on Thursday, volatility may temporarily soften, although Quadruple Witching Friday is likely to reignite investor activity.
Here’s the breakdown:
- The S&P 500 is extending its short-term consolidation despite ongoing Middle East tensions.
- There are no clear bearish signals yet, but a deeper downward correction is not out of the question at some point.
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Thank you.
Paul Rejczak
Stock Trading Strategist
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