Will stocks sustain their record-breaking advance following the release of jobs data?
Thursday’s trading session brought uncertainty to the stock market. However, the S&P 500 index managed to reach yet another record high at 6,094.55 before closing 0.19% lower. The key question remains whether the uptrend will continue, despite signs of short-term overbought conditions.
This morning, the S&P 500 is expected to open 0.2% higher following a higher-than-expected Nonfarm Payrolls report. It may continue a short-term consolidation near new record highs.
Investor sentiment has improved significantly. as shown by the Wednesday’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 remains close to its all-time highs, as we can see on the daily chart.
Nasdaq 100: Fluctuating Near 21,500
On Wednesday, the Nasdaq 100 broke through its previous highs, setting a new record of 21,517.49. However, it closed 0.31% lower after an intraday pullback. This morning, the index is expected to open 0.2% higher. Key support remains at 21,200, marked by the early November high.
VIX: Slightly Higher
The VIX index, a measure of market volatility, dropped to a new local low of 12.89 on Wednesday but has since been edging higher.
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 Pulling Back Below 6,100
The S&P 500 futures contract recently broke through the 6,100 level but pulled back to around 6,080 yesterday. While no immediate bearish signals are evident, a short-term correction remains possible. Support is at 6,030–6,060, marked by recent fluctuations. On the other hand, resistance remains at around 6,100-6,110.
Conclusion
Stock prices are likely to open 0.2% higher following monthly employment report. Is the market forming short-term top? It seems likely, but for now, it appears to be just a flat correction of the uptrend. 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 reached a new record high but faces growing uncertainty.
- 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