Stock prices rebounded on Friday as the S&P 500 index climbed back above the 5,300 level, gaining 0.70%. After a higher open on Thursday, the market sold off despite NVDA stock rallying over 9% following its earnings release. The market rebounded and retraced its Thursday daily loss, raising questions about whether it was a downward reversal or just quick profit-taking, indicating a potential flat correction and consolidation within an uptrend.
The S&P 500 index is set to open 0.1% higher after the long holiday weekend in the U.S., with futures contracts indicating this positive direction. Investors are awaiting the release of the CB Consumer Confidence report, which may introduce more uncertainty into the market. Investor sentiment has improved, as shown by the AAII Investor Sentiment Survey, with 47.0% of individual investors being bullish and 26.3% bearish. The AAII sentiment is a contrary indicator, suggesting that highly bullish readings may indicate complacency in the market.
The S&P 500 broke its upward trend line last week, highlighting potential shifts in market dynamics. Despite this, the index ended the week unchanged, consolidating along its new record high of 5,341.88. The Nasdaq 100 index showed relative strength, closing lower on Thursday but rebounding 1.0% on Friday, outpacing the broader stock market. The VIX index, known as the fear gauge, dipped below 12 again following a rebound in stock prices, signaling less fear in the market.
Looking at the futures contract trading above 5,300 on the hourly chart of the S&P 500, Friday’s rebound highlighted potential resistance and support levels. Stock prices are expected to open slightly higher, with the S&P 500 extending its consolidation around the 5,300 level. Despite Thursday’s profit-taking, the overall weekly outcome was relatively neutral, suggesting a flat correction within the uptrend. The short-term outlook remains neutral as investors navigate recent data on inflation and monetary policy.
In conclusion, the recent market trends indicate a potential consolidation and correction within the uptrend. Stock prices are likely to continue their consolidation around the 5,300 level, with the short-term outlook remaining neutral. As investors navigate economic data and corporate earnings, the market may see periods of uncertainty and potential shifts. Stay informed with free follow-ups and exclusive details by signing up for our newsletter today.
