The stock market has retraced a large part of last Thursday’s decline - which direction will it move next? The S&P 500 index gained 2.35% on Monday, reboun
The stock market has retraced a large part of last Thursday’s decline - which direction will it move next?
The S&P 500 index gained 2.35% on Monday, rebounding sharply after last Thursday’s sell-off, as investors pushed technology stocks higher despite a decline in NVIDIA (NVDA) shares. Today, the index is expected to open 0.5% lower following the release of the Consumer Price Index (CPI) data. The figure came in at +0.4% month over month, higher than expected (+0.3%).
Investor sentiment has deteriorated, as reflected in last Wednesday’s AAII Investor Sentiment Survey, which reported that 34.1% of individual investors are bullish, while 48.4% are bearish.
The S&P 500 index moved back above the 7,500 level yesterday, as shown on the daily chart.
S&P 500 Futures Contract: Rallying Toward 7,600
This morning, the S&P 500 futures contract is trading lower, as the CPI data has caused some volatility.
Resistance is currently around 7,600, while a support is at 7,500, among other levels.
Market Outlook: Back In a Medium-Term Trading Range
The S&P 500 index is likely to open slightly higher following today’s CPI release. However, the market may experience further fluctuations after yesterday’s sharp rally.
Investors will be watching upcoming earnings releases, while elevated market volatility is likely to persist.
Here's what I think is most likely:
- The S&P 500 index rebounded sharply from last Thursday’s low, but further volatility seems 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