There is some uncertainty ahead of today's market open. Will stocks maintain their uptrend?
The S&P 500 index continued its uptrend on Tuesday, reaching a new record high of 5,025.42 and closing 0.57% higher. This advance came despite Monday’s intraday pullback and overnight news regarding Trump’s tariffs involving Canada, Mexico, and China. Today, the S&P 500 is expected to open 0.1% lower, with potential uncertainty ahead of the important Core PCE Price Index release at 10:00 a.m.
Investor sentiment has weakened recently, as indicated by last Wednesday’s AAII Investor Sentiment Survey, which reported that 41.3% of individual investors are bullish, while 33.2% of them are bearish.
The S&P 500 is reaching new all-time highs this week, as we can see on the daily chart.
Nasdaq 100: Struggling to Reach Early November Highs
The Nasdaq 100 index also gained 0.57% yesterday but failed to break Monday’s daily high, remaining below the November 11 record high of 21,182.03. However, it closed the November 15 gap down at around 20,685–20,864. Today, the Nasdaq 100 is is expected to open 0.2% lower, potentially extending a short-term consolidation.
VIX Approached 14
The VIX index, a measure of market volatility, reached 18.79 last Wednesday, approaching the psychologically significant 20 level, signaling rising investor caution. However, it subsequently retraced, reaching a low of 13.88 yesterday, confirming a rally in stock prices.
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 Near Record Levels
The S&P 500 futures contract recovered from Monday’s pullback and moved closer to the recent high around 6,050. Support is at 5,980-6,000. The market remains in a short-term uptrend; however, as it nears the record high, the possibility of extending its weeks-long fluctuations increases.
Conclusion
The broader stock market reached a new record high yesterday, but this morning, the S&P 500 is expected to open slightly lower. However, no negative signals are evident. Sentiment is elevated ahead of the long holiday weekend.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- The S&P 500 hit a new all-time high yesterday.
- The market is seeing increased volatility following the post-election rally.
- In my opinion, the short-term outlook is neutral.
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Paul Rejczak,
Stock Trading Strategist