The stock market is likely to open lower today, but bulls may attempt to resume the short-term uptrend despite the negative reaction to earnings releases.
The stock market is likely to open lower today, but bulls may attempt to resume the short-term uptrend despite the negative reaction to earnings releases.
The S&P 500 index gained 0.28% on Wednesday in a relatively calm trading session, despite the Fed’s interest rate decision and the press conference by Fed Chair Warsh. After the market close, several major earnings reports were released. GOOG shares sold off, while MSFT shares gained. Today, the S&P 500 is expected to open 0.4% lower.
Investor sentiment has improved, as reflected in yesterday’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 continued its short-term uptrend yesterday, as shown on the daily chart.
S&P 500 Futures Contract: Pulling Back from Above the 7,800 Level
This morning, the S&P 500 futures contract is trading lower, retracing yesterday’s advance amid a mixed reaction to tech earnings releases.
Resistance is at 7,800-7,820, while a support is at 7,740, among other levels.
Market Outlook: Still Within a Medium-Term Consolidation
The S&P 500 index is likely to fluctuate following its recent advance as investors await further quarterly earnings reports from major tech companies. Today, we will get earnings results from AMZN and INTC.
So far, price action suggests that the index is extending the consolidation that began in early August.
Here's what I think is most likely:
- The S&P 500 index retraced more of its recent declines yesterday, but in the short term, it may move sideways.
- 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