Stocks made historic move yesterday, but are they in a new uptrend?
The S&P 500 surged an astounding 9.52% on Wednesday, marking its largest single-day gain since October of 2008. This historic rally was triggered by Trump's surprise announcement delaying most of the tariffs for 90 days. However, futures are pointing 2.0% lower this morning, suggesting profit-taking.
Today's CPI data came in lower than expected at -0.1% month over month, indicating inflation pressures may be easing.
Investor sentiment remained bearish, as shown in yesterday’s AAII Investor Sentiment Survey, which reported that 28.5% of individual investors are bullish, while 58.9% of them are bearish.
The S&P 500 retraced its recent declines in a sharp move higher, as we can see on the daily chart.
S&P 500 Futures Contract Retraces Large Portion of Recent Sell-Off
This morning, the S&P 500 futures contract is showing some weakness despite yesterday's massive rally. Key support now sits around 5,300, marked by the recent local high. Resistance is at 5,500.
In yesterday's analysis, I noted that “The contract may be forming a double-bottom pattern, though it's too early to confirm.” This proved correct.
Conclusion
The stock market experienced a historic rally following the tariff delay announcement, but uncertainty remains about whether this marks the beginning of a new uptrend or merely a sharp correction within a downtrend.
Here’s the breakdown:
- S&P 500 recorded its largest single-day gain since 2008, up 9.52%.
- CPI data came in lower than expected at -0.1% month-over-month.
- Futures are pointing lower, suggesting profit-taking after the massive rally.
- In my opinion, the short-term outlook is neutral.
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Paul Rejczak
Stock Trading Strategist