S&P 500 Retraces Recent Gains - Is This a Warning Sign?

Paul-Rejczak Paul Rejczak Mar 27, 2025

Will stocks continue lower after Wednesday's decline?

Stocks retreated on Wednesday, with the S&P 500 closing 1.12% lower, retracing most of its Monday-Tuesday advance. The market appears to be at a crossroads following its recent rebound from the March lows.

This morning, the S&P 500 is expected to open flat, fluctuating after its yesterday’s retreat..

Investor sentiment has slightly improved, as shown in yesterday’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 has pulled back from its early March consolidation levels, as we can see on the daily chart.

S&P 500 Retraces Recent Gains - Is This a Warning Sign? - Image 1

 

S&P 500 Futures Contract: Testing Recent Resistance

This morning, the S&P 500 futures contract is trading along its recent local highs, marking a support of around 5,750. Resistance is now at 5,800. The market may be trading within a correction of the short-term uptrend, or resuming its downtrend. Overall, it's at the crossroads.

S&P 500 Retraces Recent Gains - Is This a Warning Sign? - Image 2

 

Conclusion

Yesterday's retreat adds to market uncertainty as investors try to determine whether the recent rebound represents a new uptrend or merely a correction before another leg down.

For now, my short-term outlook is neutral.

Here’s the breakdown:

  • The S&P 500 has retraced most of its Monday-Tuesday advance.
  • The market still appears to be in a correction rather than a new uptrend.
  • In my opinion, the short-term outlook is neutral.
     

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Paul Rejczak,                                                                        
Stock Trading Strategist