Stocks experienced significant fluctuations on Thursday, with the S&P 500 index closing 0.51% lower amidst ongoing uncertainty and a bearish bias. However, the index is expected to open 0.7% higher following the release of the Core PCE Price Index, indicating a potential bottoming pattern in the market. As investors await crucial earnings data and the FOMC Rate Decision next week, the market remains cautious about the possibility of a deeper downward correction.
The investor sentiment has worsened, with a higher percentage of individual investors expressing bearish sentiment in the AAII Investor Sentiment Survey. The recent decline in the market has led to concerns about a possible continuation of the downtrend, with the S&P 500 index approaching the important 5,400 level on the daily chart.
The Nasdaq 100 index, which focuses on technology stocks, has also experienced a sell-off recently, leading the broader market lower. Earnings releases from tech giants like GOOG and TSLA have contributed to the downward trend, although a short-term local bottom may be nearing. The VIX index, a measure of market fear, has reached new highs, indicating increased volatility and potential market downturns.
In the futures market, the hourly chart of the S&P 500 futures contract shows signs of a potential short-term bottom forming, with the market fluctuating between support and resistance levels. However, the overall outlook for the stock market remains uncertain, with questions arising about whether the recent sell-off is just a correction or the start of a downtrend. As the market awaits further developments, the short-term sentiment remains bearish.
As the market continues to evolve, investors are keeping a close eye on upcoming earnings releases and the Fed’s decision next week. While historical patterns suggest a possible low in October, current trends indicate a downtrend with the potential for an upward correction in the short term. For now, the market remains cautious, and investors are advised to stay informed and prepared for any further developments in the market.
