The S&P 500 continues to fluctuate - what’s next?
Stock prices moved lower on Tuesday, with the S&P 500 index closing down 0.84% amid escalating fears over the Middle East conflict. Today, the market is focused on the key FOMC interest rate decision, due at 2:00 p.m. While no rate change is expected, President Trump is expected to continue pressuring Fed Chair Jerome Powell to lower rates.
In my opinion, this remains a short-term consolidation phase, with no confirmed bearish signals at the moment. This morning, the S&P 500 is projected to open 0.2% higher, 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 indicates.
Nasdaq 100 Remains Below 22,000
The Nasdaq 100 fell 1.00% on Tuesday, giving back Monday’s rebound and extending its consolidation. Support is currently around 21,500, with resistance is near the 22,000–22,200 range.
VIX Holds Above 20
Last Wednesday, the Volatility Index (VIX) dropped to a local low of 16.23, reflecting reduced investor fear. However, by Friday, it rebounded to a local high of 22.00 amid rising Middle East tensions. Yesterday, the VIX approached the 22 level again.
Historically, a dropping VIX indicates less fear in the market, and rising VIX accompanies stock market downturns. However, the lower the VIX, the higher the probability of the market’s downward reversal. Conversely, the higher the VIX, the higher the probability of the market’s upward reversal.
S&P 500 Futures Contract Continues to Fluctuate
This morning, the S&P 500 futures contract is trading near the 6,050 level after pulling back from key short-term resistance at 6,100 yesterday. The support remains around 5,980-6,000, marked by recent local lows.
Conclusion
Tuesday’s pullback extended the ongoing consolidation in the S&P 500. Today, the market is set to open slightly higher. While more uncertainty is likely, we may be approaching a breakout from the current trading range.
Markets are now awaiting the FOMC monetary policy update today. With a holiday tomorrow, volatility may temporarily soften, although Quadruple Witching Friday is likely to reignite investor activity.
Here’s the breakdown:
- The S&P 500 continues its short-term consolidation despite geopolitical tensions, key economic data, and the upcoming Fed decision.
- 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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