Thursday’s trading session saw the stock market closing lower, with the S&P 500 index down by 0.88%. This decline was attributed to lower-than-expected consumer inflation data, leading to a sell-the-news price action. However, it remains uncertain whether this is the start of a new trend or just a temporary correction. Bulls are expected to be cautious in the current market environment.
Despite no confirmed negative signals, a speculative short position was opened on Tuesday, which is still being justified given the market’s fluctuations. The S&P 500 is expected to open flat following the Producer Price Index release, which came in slightly higher than expected. Quarterly earnings releases from major banks have been positive but are seeing some profit taking.
Investor sentiment has improved significantly, with a bullish sentiment prevailing among individual investors. The recent AAII Investor Sentiment Survey showed that 49.2% of investors are bullish, while only 21.7% are bearish. Looking ahead to July, the market is expected to remain cautious, with the possibility of a deeper downward correction.
The Nasdaq 100 index experienced a larger sell-off, closing 2.24% lower following declines in tech stocks like NVDA and TSLA. The VIX index, which measures market fear, remains relatively low, indicating a lack of fear in the market. Futures contracts for the S&P 500 are trading sideways following the PPI release, with the market showing signs of a potential downward correction.
In conclusion, the recent market movements suggest a potential correction, with the market remaining near its lows. Quarterly earnings and economic data releases in July will be key factors influencing market sentiment. Despite the current bearish outlook, the overall medium-term trend is still expected to be positive. Sign up for our newsletter to receive more insights and details not available to the general public.
