The question on many investors’ minds as they look towards the start of a new trading week is whether the optimistic surge observed in the markets last Friday will persist. On that day, the markets saw a noteworthy uplift with the S&P 500 index climbing by 1.03%, culminating just above the estimable 6,000 mark. This closing figure represented its most fruitful conclusion since the 21st of February, rekindling the upward trend that took a brief hiatus the preceding Thursday. This revival of positive momentum was predominantly propelled by the release of an economic report that surpassed expectations, rejuvenating investor confidence.
As we venture into today’s trading session, early indications suggest a modest opening for the S&P 500, with predictions pointing towards a 0.1% incline. The index now appears to be grappling with the 6,000 level, a significant milestone, hinting at a potential period of consolidation. It’s especially pertinent now as the index retraces its path through the January-February range, almost entirely rebounding from the declines attributed to tariff concerns.
The landscape of investor sentiment is emblematic of the broader uncertainty pervading the market. According to Wednesday’s AAII Investor Sentiment Survey, optimism and pessimism are closely contested, with 32.7% of individual investors expressing bullish outlooks, while 41.4% lean towards bearish perspectives. Current trading patterns reveal the S&P 500 teetering around the 6,000 resistance level, suggesting a tangible tension between hopes for growth and apprehensions about future setbacks.
As we delve deeper into a weekly analysis, the S&P 500 showcased a 1.50% accentuation compared to its standing the previous Friday. This progression is indicative of the sustained, albeit modest, uptrend observed. The index’s resilience, staying afloat above the early May weekly gap-up, serves as a bullish cue for market analysts. However, the encroaching resistance around the 6,100 mark poses a notable challenge moving forward.
Turning our gaze towards the Nasdaq 100, a comparative analysis highlights a somewhat divergent story. Despite achieving a 0.99% increase on Friday, this tech-centric index finds itself below the local high established on Thursday. The minor setback witnessed that day positions Friday’s gains more as a corrective measure rather than heralding a robust breakout. Looking ahead, the Nasdaq 100 is anticipated to kick off today’s session on a relatively stable note, with critical support pegged around the 21,500 level, shadowed closely by resistance stretching between 22,000 to 22,200.
The volatility index (VIX), often referred to as the market’s “fear gauge,” dipped to a local minimum of 16.65 on Friday, reflecting subdued investor anxiety. Historically, a declining VIX signals a tempering of market fears, whereas an ascendant VIX usually accompanies downturns. The inverse relationship between VIX levels and market performance adds another layer of complexity to predicting future market movements. A lower VIX often precursors a market plateau or reversal, whereas higher values can suggest impending rebounds.
As for the S&P 500 futures, they have maintained their position above the 6,000 threshold, navigating through a steady trajectory post-Friday’s vigorous session. The proximity of support and resistance levels – 5,950 and 6,020 to 6,050 respectively – delineates the immediate battleground for market movements.
In conclusion, as today’s trading session unfolds, the S&P 500 is primed for a slight uptick, succeeding Friday’s buoyant performance. The air of cautious optimism prevails amid the anticipatory build-up to significant economic updates slated for release over the week, including a pivotal Consumer Price Index (CPI) report on Wednesday. The overarching question remains – will the bullish trend persist? While there are no overt indicators of impending negative shifts, the market’s recent volatility underscores a palpable degree of uncertainty. Investors and market watchers alike are poised on a precipice, contemplating whether the market will ascend the proverbial “wall of worry” or plateau amidst consolidatory pressures around the 6,000 mark. In essence, while Friday’s upsurge breached the 6,000 level, ongoing tariff dilemmas may limit the upper bounds of this optimism, infusing the market trajectory with an air of suspense.
Will Friday’s advance continue today?
Stocks advanced on Friday, with the gaining 1.03% and closing slightly above the 6,000 level – its highest close since February 21. The market resumed its uptrend following Thursday’s pullback, as investors reacted positively to a better-than-expected report.
Today, the S&P 500 is expected to open 0.1% higher. I anticipate potential consolidation around the 6,000 level. The index is currently testing the January-February range after nearly retracing its entire tariff-related decline.
Investor sentiment remained mixed, as reflected in Wednesday’s AAII Investor Sentiment Survey, which reported that 32.7% of individual investors are bullish, while 41.4% are bearish.
The S&P 500 continues to trade near the resistance of around 6,000.
S&P 500: Another Weekly Advance
The S&P 500 ended the week 1.50% higher compared to the previous Friday. While the market extended its uptrend, gains were relatively modest.
The index is still trading above the early May weekly gap-up, which is a bullish technical signal. However, resistance is now around 6,100.
Nasdaq 100: Relatively Weaker
The gained 0.99% on Friday but remained below Thursday’s local high. The 0.8% drop on Thursday means Friday’s rebound was more of a consolidation move than a breakout. Today, the tech-heavy index is expected to open virtually flat.
Support is around 21,500, while resistance is at 22,000-22,200.
VIX Dipped Below 17
The (VIX) fell to a local low of 16.65 on Friday, indicating reduced investor fear.
Historically, a dropping VIX indicates less fear in the market, and a 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: Above 6,000
This morning, the contract is trading above 6,000, moving sideways after Friday’s strong session..
The nearest support is now near 5,950, while resistance is at 6,020, followed by 6,050.
Conclusion
The S&P 500 is set to open slightly higher today, continuing Friday’s positive sentiment. Investors are cautiously optimistic ahead of key economic data releases this week, including the Consumer Price Index (CPI) report on Wednesday.
Will the uptrend continue? There are currently no strong negative signals, but recent volatility suggests uncertainty. The market may “climb a wall of worry,” or it may consolidate around the 6,000 level.
Here’s the breakdown:
- The S&P 500 broke above the 6,000 level on Friday.
- No clear bearish signals, but upside may be limited due to ongoing tariff concerns.
