Stocks continue sideways as markets await a wave of data releases and earnings reports.
Monday’s trading session saw little change in the stock market, with investors awaiting key earnings reports, economic data, and next week’s U.S. presidential election. The S&P 500 closed 0.27% higher, holding above the 5,800 level. Futures indicate a 0.2% lower opening this morning.
Investor sentiment worsened considerably last week, as shown in Wednesday’s AAII Investor Sentiment Survey, which reported that 37.7% of individual investors are bullish, while 29.9% of them are bearish, up from 25.4% last week.
The S&P 500 remains in a short-term consolidation, as we can see on the daily chart.
Nasdaq 100: Uncertainty Ahead of Key Tech Earnings
The Nasdaq 100 was unchanged yesterday, after pulling back from intraday highs. It’s set to open about 0.1% lower today. However, attention is focused on post-session quarterly earnings reports from GOOG, AMD, and SNAP, with MSFT and META reporting tomorrow, and AAPL, AMZN, and INTC on Thursday. Resistance remains near 20,600, with support at 20,000.
VIX Remains Near 20
The VIX index, a measure of market volatility, remains near the 20 level, reflecting heightened caution in the market.
Historically, a dropping VIX indicates less fear in the market, and 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.
Futures Contract: Consolidation Continues
The S&P 500 futures contract rebounded from Friday’s low yesterday but is gradually pulling back again, nearing the 5,850 level. Resistance holds at 5,900-5,925, with support at 5,800-5,825. Consolidation has now extended for two weeks, and upcoming data and earnings could prompt a breakout in either direction.
Conclusion
Today’s market is likely to open slightly lower, with attention focused on the CB Consumer Confidence release and JOLTS Job Openings at 10:00 a.m. Later, tech volatility may dominate as investors await earnings from GOOG, AMD, and SNAP.
On Friday, I wrote “The S&P 500 is likely to fluctuate ahead of significant earnings reports over the next two weeks and the upcoming presidential elections.” This outlook still applies, as the market could experience more volatility due to economic data, earnings, and the upcoming presidential elections.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- The S&P 500 remained sideways on Monday.
- This still appears to be an extended consolidation following the rally from September’s low, with investors awaiting key announcements.
- In my opinion, the short-term outlook is neutral.
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Paul Rejczak,
Stock Trading Strategist