The S&P 500 pulled back yesterday - will it continue to decline?
The S&P 500 index lost 1.61% on Wednesday, retracing recent gains as investors reacted to weak demand in a $16 billion auction of 20-year Treasury bonds. Today, the S&P 500 is expected to open 0.6% lower, approaching the 5,800 level. The 5,900–6,000 range remains a key resistance zone that the market failed to break during the recent rally.
Investor sentiment has further improved, as reflected in yesterday’s AAII Investor Sentiment Survey, which reported that 37.7% of individual investors are bullish, while 36.7% are bearish.
The S&P 500 appears to be pulling back from its January–February consolidation.
S&P 500 Futures Contract Reaches New Local Low
This morning, the S&P 500 futures contract extended its short-term decline, breaking below yesterday’s low. While this move doesn't necessarily confirm the start of a downtrend, it may signal a shift in market sentiment.
Support is now around the 5,750–5,800 level, marked by previous price fluctuations.
Conclusion
The S&P 500 is likely to extend yesterday’s decline this morning, with futures contracts currently trading 0.6% lower. At this point, the move appears to be a correction within the uptrend. However, a more prolonged downtrend cannot be ruled out, as interest rate policy, tariff uncertainty, and broader economic and geopolitical factors may be weighing on the market.
Here’s the breakdown:
- Stocks have retraced their recent advances and today, they’re likely to open 0.6% lower.
- On Monday, the S&P 500 reached its highest level since February, nearing the 6,000 level and extending gains for those who bought based on my Volatility Breakout System.
- The 6,000 level remains a key resistance that the market failed to breach.
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Thank you.
Paul Rejczak
Stock Trading Strategist
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