Are stocks forming a bottom, or just pausing before another leg lower?
Stocks moved sideways on Wednesday, with the S&P 500 closing 0.49% higher after the key Consumer Price Index release. While the data came in lower than expected, the market failed to rebound and instead fluctuated following its recent sell-off.
Today, the S&P 500 is set to open 0.2% lower after the release of the Producer Price Index, which also came in lower than expected at 0.0% month-over-month. Stocks are likely to remain volatile as consolidation continues.
Investor sentiment remains bearish, as shown in the yesterday’s AAII Investor Sentiment Survey, which reported that only 19.1% of individual investors are bullish, while 59.2% of them are bearish.
The S&P 500 remains near its recent local low, as we can see on the daily chart.
S&P 500 Futures Contract: Fluctuating Below 5,600
This morning, the S&P 500 futures contract is trading within a consolidation range, extending uncertainty after the recent sell-off.
Resistance is currently at 5,600–5,650, while support remains around 5,550. The contract continues to trade well below its downward trendline.
Conclusion
Stocks are likely to extend their short-term consolidation as investor sentiment remains bearish.
Given rising geopolitical uncertainty and worsening investor sentiment, no clear positive signals are evident. It seems the bull market may be due for a longer pause.
Quoting my Stock Price Forecast for March 2025 “the stock market is poised for a positive start to the month, though this may simply be another part of its medium-term consolidation. The S&P 500 keeps fluctuating following its post-election rally.”
For now, my short-term outlook is neutral.
Here’s the breakdown:
- The S&P 500 is moving sideways after its recent sell-off.
- CPI data didn’t trigger a short-term rebound.
- 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 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). Stock 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