The stock market is fluctuating following last Friday’s sell-off, but is this a bottoming pattern? The S&P 500 index closed 0.51% lower on Monday, extendin
The stock market is fluctuating following last Friday’s sell-off, but is this a bottoming pattern?
The S&P 500 index closed 0.51% lower on Monday, extending Friday’s sell-off but rebounding from a local low of around 7,540. Today, the index is expected to open 0.1% lower following yesterday’s earnings release from AAPL, whose shares are expected to open around 4% lower.
Recently, the investor sentiment has improved, as reflected in last Wednesday’s AAII Investor Sentiment Survey, which reported that 37.8% of individual investors are bullish, while 41.4% are bearish.
The S&P 500 index remained near its local lows on Monday, as shown on the daily chart.
S&P 500 Futures Contract: Trading Near Friday’s Low
This morning, the S&P 500 futures contract is trading sideways following yesterday’s pullback and the sell-off triggered by AAPL’s earnings release.
Resistance is currently around 7,600, while a support is at 7,550, among other levels.
Market Outlook: Attempting to Break Below Three-Month-Long Consolidation
The S&P 500 index is likely to open slightly lower or close to flat today. Investors are awaiting further earnings releases and the results of the U.S. midterm elections.
So far, price action suggests that the index is extending the consolidation that began in early August. However, the market is trading near the lower boundary of this range.
Here's what I think is most likely:
- The S&P 500 index moved back toward Friday’s low yesterday, but a short-term consolidation appears likely.
- My Volatility Breakout System is currently long in the market.
What This Means for Your Portfolio
For individual investors, this environment calls for careful position management. While the market continues to advance, the combination of low volatility, seasonal weakness signals, and stretched valuations suggests that defensive positioning may become increasingly important in the weeks ahead.
The current market conditions highlight the value of having a systematic approach to investing rather than trying to time every market move. Whether you're using technical systems like the Volatility Breakout System or following seasonal patterns, having a disciplined framework becomes crucial during uncertain times.
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Thank you.
Paul Rejczak
Stock Trading Strategist