Will stocks reverse downwards as Trump's tariff announcement approaches?
The S&P 500 rebounded by 0.55% on Monday from its new local low of 5488.73, providing temporary relief after Friday's sharp 2% selloff. However, this morning, futures are pointing to a 0.7% lower open for the S&P 500 index. The market will face more uncertainty following its last week's declines.
Investor sentiment has slightly improved, as shown in last Wednesday’s AAII Investor Sentiment Survey, which reported that 27.4% of individual investors are bullish, while 52.2% of them are bearish.
The S&P 500 rebounded from around 5,500, as we can see on the daily chart.
S&P 500 Futures Contract Rebounds from New Low
This morning, the S&P 500 futures contract is trading within a short-term consolidation following its yesterday's intraday rebound. Currently, resistance is around 5,650-5,670, marked by recent local lows and yesterday's high.
Conclusion
Monday's rebound provided temporary relief, but futures suggest this may have been a correction within the downtrend rather than a true reversal. With Trump's tariff announcement approaching tomorrow, market volatility is likely to remain elevated. The market is also eagerly awaiting today's economic data: ISM Manufacturing PMI and JOLTS Job Openings numbers scheduled to be released at 10:00 a.m.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- The S&P 500 rebounded from a new low on Monday.
- Trump's expected broad tariff announcement tomorrow poses significant uncertainty.
- In my opinion, the short-term outlook is neutral, and no speculative positions are justified from the risk/reward point of view.
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Thank you.
Paul Rejczak,
Stock Trading Strategist