The S&P 500 reached a new record; will it continue its uptrend after yesterday's pullback?
Monday’s trading session brought volatility to the stock market. The S&P 500 reached a new record high of 6,020.75 before closing just 0.3% higher, slightly above its opening price. Despite the market's relative weakness after yesterday’s intraday pullback and overnight news about Trump’s tariffs involving Canada, Mexico, and China, it is expected to open 0.2% higher this morning.
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 continues to trade near the 6,000 level, as we can see on the daily chart.
Nasdaq 100 Pulled Back from 21,000
The Nasdaq 100 index gained a modest 0.14% after pulling back from its daily high of 20,998.48. It closed the November 15 gap down at around 20,685–20,864, but failed to remain above this resistance level. Today, the Nasdaq 100 is expected to open 0.3% higher, potentially making another attempt to close this gap.
VIX Dipped Below 15
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 retreated on Friday, closing near 15, and dipped as low as 14.54 yesterday, signaling improving sentiment.
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 Rise Above 6,000 Again
The S&P 500 futures contract pulled back after yesterday’s session close, but this morning it’s trading above the 6,000 level as sentiment improves despite overnight tariff news. The next resistance lies at 6,035–6,050, marked by record highs. On the other hand, the support remains at 5,980-6,000.
Conclusion
Stock prices are poised to open slightly higher this morning, with the S&P 500 index likely to extend its short-term consolidation. Despite setting a new record high yesterday, the index pulled back before the session close. This morning, investors will be waiting for the important CB Consumer Confidence report at 10:00 a.m., along with tomorrow’s data. However, market volatility may decrease ahead of the Thanksgiving holiday on Thursday.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- The S&P 500 reached a new all-time high but retraced to its previous range.
- The market is seeing increased volatility following the post-election rally.
- In my opinion, the short-term outlook is neutral.
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Thank you.
Paul Rejczak,
Stock Trading Strategist