Stocks further accelerated their uptrend yesterday, closing 1.61% higher and surpassing new local highs above the 5,500 level. Almost erasing all declines from the August 1 local high, the market’s resilience has both dazzled and puzzled traders.
As the market teeters on the brink of potential exhaustion, the burning question lingers: Will the rally propel to uncharted peaks, or is a reversal looming on the horizon, ready to retrace the euphoric surge?
Today, a foreboding shadow looms as the S&P 500 is poised to open 0.6% lower, a stark contrast to the previous exuberance signaled by futures contracts.
Yesterday’s musings forewarned of a potential double-top or new highs amid what appeared as a correction following a mid-July descent. The market now stands at a crossroads, oscillating between history’s echoes and the fervor of fresh prospects.
Amidst this seesaw of market sentiment, Wednesday’s AAII Investor Sentiment Survey uncovered shifting tides, with 42.5% of individual investors emerging as bulls, while a lesser 28.9% succumbed to bearish inclinations – a downtick from the 37.5% pessimism just a week prior.
A glance at the S&P 500 index history reveals a near-tango with the August local high, a spectacle captured in the rhythmic drumbeats of the daily chart.
Nasdaq 100: Scaling 19,500 Heights
The technologically-charged Nasdaq 100 embarked on a whirlwind ascent this week, sweeping through short-term uptrends and culminating in a breathtaking 2.46% surge during recent trading sessions.
Yet, as dawn beckons today, the Nasdaq 100 is primed to commence at a 0.2% descent, the resistance stronghold looming at 19,500-19,550, staunchly guarded by the August 1 local high hovering near 19,539.
VIX: A Dance with Fear Below 15
Merely days ago, the VIX – the market’s thermometer for fear – scaled towering peaks, mirroring the market’s anguish during the 2008 financial abyss and the turbulent turmoil of 2020.
However, a swift metamorphosis has seen the VIX retreat, dipping as low as 14.77, painting a less harrowing picture of fear in markets. The VIX’s subtle whispers now beckon a delicate dance between risk and reassurance.
Historically, a declining VIX signifies waning market dread, often paralleled by soaring stocks; however, the VIX’s plunge, akin to a tide ebbing too far, hints at a looming undertow, warning of potential market reversals.
Futures Contract: Edging Towards 5,500
Poring over the hourly charts of the futures contract, yesterday’s bullish fervor catapulted to a crescendo with a new local pinnacle grazing at 5,583.
However, today’s market semblance betrays a downward tilt, a retracement of yesterday’s jubilance, perhaps heralding a temporary pause. Eyes are fixed on the broken threshold of 5,500, a level that once confined, now beckons as a potential slumbering giant ready to stir.
In the Throes of Uncertainty: Potential Crossroads Ahead
In the Stock Price Forecast for August, a tempest brewed, swelling in the wake of a sell-off that turbulent month bore witness to. As the market navigated stormy seas, a glimmer of hope emerged:
“The rebound from last Monday’s nadir resonated, coaxing the bulls back from the brink. Yet, amidst the ebbs and flows, the prospect of new record highs stands juxtaposed with the undertow of a looming correction.”
A buoyed by the fervor of recent days, the market faces a pivotal juncture. Will this exuberance pave the way for historic summits, or is a mere illusion obscuring an impending market prophecy?
Last week’s reflections painted a similar narrative, a reality check amidst the jubilation:
“The recent retracement hints at a broader canvas still in play. While the bulls find solace in recent gains, the wolves of volatility loom large, ready to pounce at any hint of a Market reversal.”
As the market oscillates between shadows of uncertainty and glimpses of resurgence, my short-term prognosis, like a compass in a turbulent sea, remains steadfastly neutral.
In summary:
- The S&P 500 index surged past the 5,500 milestone, reaffirming its short-term momentum.
- Today’s retracement may paint a semblance of retreat, but the bullish fervor is far from extinguished.
- My sentiments remain anchored in the neutrality of the short-term outlook.
