Stock prices are reaching new highs, but will the rally go further?
Stocks gained on Wednesday, with the S&P 500 reaching a new all-time high of 6,089.84 before closing 0.61% higher. The market reacted to quarterly earnings, economic data, and an interview with Jerome Powell. The key question now is whether the uptrend will continue, despite signs of short-term overbought conditions.
This morning, the S&P 500 is expected to open 0.1% lower, suggesting a possible consolidation or correction after the recent rally.
Investor sentiment has improved significantly. as shown by yesterday’s AAII Investor Sentiment Survey, which reported that 48.3% of individual investors are bullish, while 30.7% of them are bearish - a decrease from 38.6% the previous week.
The S&P 500 reaches new all-time highs, as we can see on the daily chart.
Nasdaq 100 Accelerates Uptrend
The Nasdaq 100 broke through previous highs, climbing 1.24% to set a new record at 21,498.44. It is expected to open 0.1% lower today. The support level is now at 21,200, marked by the early November high.
VIX Inches Higher Despite Advancing Stocks
The VIX index, a measure of market volatility, dropped to a new local low of 12.89 yesterday before closing slightly higher despite advances in stocks. It was the lowest since mid-July. This could signal a potential correction in stock prices.
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.
S&P 500 Futures Approach 6,100
The S&P 500 futures contract briefly surpassed 6,100 yesterday, setting a new record. While no immediate bearish signals are evident, a short-term correction remains possible. Support is at 6,030–6,060, marked by recent fluctuations.
Conclusion
Stocks are poised to open virtually flat this morning, possibly entering a period of consolidation after Wednesday’s record-breaking rally. Will the market reach new records? It remains within an uptrend, and no clear negative signals are evident.
On Monday, in my Stock Price Forecast for December 2024, I wrote “the stock market experienced a strong rally in November, driven by the presidential election outcome. While December is historically a bullish month, increased volatility and a short-term correction remain likely”
For now, my short-term outlook is neutral.
Here’s the breakdown:
- The S&P 500 continues its uptrend, reaching new record highs.
- The market is still seeing increased volatility following the post-election rally.
- In my opinion, the short-term outlook is neutral.
The full version of today’s analysis - today’s Stock Trading Alert - is bigger than what you read above, and it includes the additional analysis of the Apple (AAPL) stock and the current S&P 500 futures contract position. I encourage you to subscribe and read the details today (with a single-time 16-day free trial). Stocks Trading Alerts are also a part of our Diamond Package that includes Gold Trading Alerts and Oil Trading Alerts.
And if you’re not yet on our free mailing list, I strongly encourage you to join it - you’ll stay up-to-date with our free analyses that will still put you ahead of 99% of investors that don’t have access to this information. Join our free stock newsletter today.
Thank you.
Paul Rejczak,
Stock Trading Strategist