Stocks: Will They Resume Their Uptrend?

Paul-Rejczak Paul Rejczak Nov 20, 2024

Will stocks resume their record-breaking advance? The market awaits NVDA's numbers.

Tuesday's trading session was slightly positive for the stock market, with the S&P 500 index closing 0.40% higher and moving above the 5,900 level again. The index rebounded from October's local highs as sentiment improved ahead of today's key NVDA earnings release. Futures contracts indicate that stock prices are likely to open 0.2% higher this morning.

Investor sentiment improved last week, as shown in Wednesday’s AAII Investor Sentiment Survey, which reported that 49.8% of individual investors are bullish, while 28.3% of them are bearish.

The S&P 500 has managed to stay above its October highs, as we can see on the daily chart.

Stocks: Will They Resume Their Uptrend? - Image 1

Nasdaq 100 Gains Ahead of NVDA Earnings

The Nasdaq 100 index closed 0.71% higher yesterday, breaking back above the important 20,600 level. On Friday, it had fallen below that support level, returning to its October trading range. This morning, the Nasdaq is also expected to open 0.2% higher as investors await NVDA's much-anticipated earnings report after today's session close.

Stocks: Will They Resume Their Uptrend? - Image 2

VIX: Continued Fluctuations

The VIX index, a measure of market volatility, reached 17.93 yesterday before retreating as stock prices climbed. This reflects a bit of fear and caution among investors following the recent pullback.

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.

Stocks: Will They Resume Their Uptrend? - Image 3

 

S&P 500 Futures Rebound Above 5,950

The S&P 500 futures contract hit a local high of 5,958, retracing more of the recent decline. Support remains at 5,880-5,900, marked by the previous highs, and the next resistance is at 5,980-6,000.

Stocks: Will They Resume Their Uptrend? - Image 5

 

Conclusion

The S&P 500 index is expected to open slightly higher this morning as the market anticipates the key NVDA earnings report, scheduled for release after the session close. The question remains: Was the recent pull-back start of a new downtrend or merely a correction within an uptrend? Currently, it seems to be a downward correction following the recent rally.

For now, my short-term outlook is neutral.

Here’s the breakdown:

  • The S&P 500 may continue rebounding ahead of NVDA earnings.
  • The market has entered a period of increased volatility.
  • In my opinion, the short-term outlook is neutral.

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Thank you.

Paul Rejczak,
Stock Trading Strategist