The S&P 500 has reached a new all-time high. Is there still more upside potential?
The stock market extended its uptrend on Thursday, with the S&P 500 index reaching a new record high of 6,118.73, closing 0.53% higher.
Today, the S&P 500 futures contract is trading 0.1% lower, indicating a potential consolidation following recent gains. Investors are awaiting the release of key PMI numbers at 9:45 a.m.
Investor sentiment has significantly improved, as shown by the Wednesday’s AAII Investor Sentiment Survey, which reported that 43.4% of individual investors are bullish, while 29.4% of them are bearish.
The S&P 500 index has broken above its early December highs, as we can see on the daily chart.
Nasdaq 100 Remained Below 22,000
The Nasdaq 100 closed just 0.22% higher on Thursday, underperforming the broader stock market.
Key resistance is still at 22,000–22,100, and the Nasdaq 100 is expected to open 0.1% lower today.
VIX Moves Along 15
On December 18, the VIX index, a measure of market volatility, surged to 28.32, its highest level since early August. After dropping below 15 in late December, the VIX rose again, and last Monday, it reached a high of 22.04.
Yesterday, it dipped to a low of 14.59 again, after erasing more its early January gains on Wednesday.
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 Contract Nears Record Highs
This morning, the S&P 500 futures contract is trading slightly below the 6,150 level. Support is now at 6,100, marked by the previous resistance.
For now, the market continues to extend its consolidation, though it appears increasingly likely to retest its record highs.
Conclusion
Stocks are expected to open virtually flat this morning, with sideways movement likely following recent advances. The market may face profit-taking at some point, however, no negative signals are evident.
On January 6, in my Stock Price Forecast for January 2025, I wrote that “the stock market is poised for continued fluctuations following the post-election rally in November. Although the S&P 500 dipped by 2.5% last month, this appears to be just a correction of November’s gains.
Will the market resume its uptrend and reach new record highs? This appears likely at some point, driven by growing optimism ahead of Trump’s upcoming inauguration on January 20. However, rallies may provide selling opportunities, leading to a medium-term consolidation phase.”
For now, my short-term outlook is neutral.
Here’s the breakdown:
- The S&P 500 is likely to fluctuate after its record-breaking rally.
- The stock market is still seeing increased volatility following the post-election rally.
- In my opinion, the short-term outlook is neutral.
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Thank you.
Paul Rejczak,
Stock Trading Strategist