Inventory costs broke their short-term shedding streak yesterday, because the index gained 0.86%. Earlier this week, the market saved retracing its final week’s record-breaking rally; nevertheless, it was doing so at a really gradual tempo. Final Thursday, the S&P 500 reached a file excessive of 5,261.10, and on Tuesday, it traded as little as 5,203.42. Final week, inventory costs have been influenced by the FOMC Charge Determination on Wednesday; this week, traders are bracing for financial knowledge releases, together with tomorrow’s Friday’s Core PCE Value Index. Nonetheless, with because the lengthy vacation weekend approaching, volatility could also be lowering.
This morning, the contract is gaining 0.1%, indicating a impartial opening of the index. The query stays: will the final Thursday’s surge result in a downward correction and a possible retracement of the advance? From a contrarian standpoint, such a correction appears doubtless, however the total pattern stays bullish.
On March 1, I discussed about February, “Regardless of issues about inventory valuations, the market rallied to new file highs, fueled by hopes of the Fed’s financial coverage pivot and the AI revolution.”. And final week, it was all about that Fed pivot, therefore a constructive market response. The S&P 500 index nonetheless appears to be crawling a wall of fear right here.
Whereas indexes have been hitting new file highs, most shares have been primarily transferring sideways. So, the query is – is that this a topping sample earlier than a extra significant correction? Nonetheless, there have been no confirmed destructive alerts; nevertheless, one would possibly contemplate the potential for a pattern reversal.
The investor sentiment a lot improved; yesterday’s AAII Investor Sentiment Survey confirmed that fifty.0% of particular person traders are bullish, whereas solely 22.4% of them are bearish, down from 27.2% final week. The AAII sentiment is a opposite indicator within the sense that extremely bullish readings could recommend extreme complacency and an absence of worry available in the market. Conversely, bearish readings are favorable for market upturns.
The S&P 500 index continues to commerce above its over month-long upward pattern line once more, as we will see on the every day chart.
Nasdaq 100 Bounced From 18,200
Final Thursday, the technology-focused index reached a brand new file excessive of 18,464.70, extending its long-term uptrend but once more. Nonetheless, this week, it went again barely under the 18,200 stage, earlier than bouncing and gaining 0.39% yesterday. The market retreated again throughout the latest consolidation, indicating a failed breakout try. The short-term help stage stays at 18,200.
VIX Stays Near 133
The , also referred to as the worry gauge, is derived from choice costs. Final Thursday, the index dipped barely under the 12.50 stage, earlier than bouncing nearer to 13 later within the day. It was the bottom since mid-January, indicating an absence of worry available in the market. Yesterday, it saved fluctuating alongside the 13 stage, earlier than closing under that stage on advancing inventory costs.
Traditionally, a dropping VIX signifies much less worry available in the market, and rising VIX accompanies inventory market downturns. Nonetheless, the decrease the VIX, the upper the likelihood of the market’s downward reversal.
Futures Contract Is Above 5,300 Once more
Let’s check out the hourly chart of the S&P 500 futures contract. This morning, it’s buying and selling barely above the 5,300 stage once more, following yesterday’s rebound. The resistance stage is at 5,320, marked by the file excessive, and the help stage stays at 5,260, marked by the earlier highs.
Conclusion
At the moment, the S&P 500 index is more likely to open nearly flat. The market is principally nonetheless going sideways following final week’s advances. Extra pronounced profit-taking motion could also be in playing cards in some unspecified time in the future. Nonetheless, as of now, there have been no confirmed destructive alerts.
In my Inventory Value Forecast for March, I famous “Thus far, inventory costs have been trending upwards within the medium to long run, reaching new file highs. The prudent recommendation one may give proper now’s to stay bullish or keep on the sidelines if one believes shares have gotten overvalued and might have a correction. It is doubtless that the S&P 500 will proceed its bull run this month. Nonetheless, we could encounter a correction or elevated volatility in some unspecified time in the future as traders begin to take earnings off the desk.”
For now, my short-term outlook stays impartial.
Right here’s the breakdown:
The S&P 500 is more likely to lengthen a short-term consolidation following final week’s rally, with markets anticipating an extended vacation weekend.
Within the medium time period, inventory costs are overbought, suggesting the potential for a correction.
In my view, the short-term outlook is impartial.
