Stocks rebounded despite turmoil in the Middle East - is the worst over?
The S&P 500 index closed 0.96% higher on Monday following an overnight sell-off in futures triggered by U.S. involvement in the Israel–Iran conflict over the weekend. Improved sentiment helped the market recover within its recent trading range.
Investors are now awaiting Federal Reserve Chair Jerome Powell’s testimony, scheduled for today at 10:00 a.m. and again tomorrow. The S&P 500 is set to open 0.7% higher this morning on news of a potential ceasefire between Israel and Iran.
Investor sentiment has slightly deteriorated, as reflected in the last Wednesday’s AAII Investor Sentiment Survey, which reported that 33.2% of individual investors are bullish, while 41.4% are bearish.
The S&P 500 has climbed back above the 6,000 mark, as the daily chart indicates.
S&P 500 Futures Contract: Above 6,100
This morning, the S&P 500 futures contract is trading above 6,100, after rebounding from an overnight low near 5,959 on Monday. However, the market appears to be losing momentum and may enter a period of consolidation.
The support is now around 6,050, marked by recent local highs. On the other hand, resistance is at 6,150, among others.
The market remains highly sensitive to geopolitical developments and could remain volatile in the near term.
Conclusion
Stocks are expected to open higher this morning, with the S&P 500 approaching its February 19 record high of 6,147.43, which may act as resistance.
Will the market eventually correct more of its late-May gains? I think that for now, there are no confirmed bearish signals. It still looks like a consolidation within an uptrend.
Here’s the breakdown:
- The S&P 500 is likely to continue its short-term advance today, potentially re-testing the 6,100 level.
- 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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