Will today's advance mark a genuine recovery or just an upward correction?
The S&P 500 set a new local low of 4835.04 on Monday, the lowest since January 2024, closing 0.23% lower after an intraday rebound. After the open, it sold off sharply but then recovered quickly following reports (later deemed false) about a possible Trump tariff delay.
Investor sentiment has significantly worsened, as shown in last Wednesday’s AAII Investor Sentiment Survey, which reported that 21.8% of individual investors are bullish, while 61.9% of them are bearish.
The S&P 500 experienced significant volatility on Monday, as we can see on the daily chart.
S&P 500 Futures: Breaking Above Its Steep Downward Trend Line
This morning, the S&P 500 futures contract is signaling a strong bounce this morning, advancing 2.5%, However, this appears to be a technical rebound after the severe declines of recent sessions rather than a fundamental shift in market direction.
Resistance is around 5,300, while support is now around 5,100.
Conclusion
The stock market continues to experience extreme volatility as investors digest the implications of a potential global trade war. Key support levels have been violated across all major indices, confirming technical damage that will take time to repair. However, today the market is set for a rebound, likely retesting the local highs from the beginning of yesterday's trading session.
Here’s the breakdown:
- S&P 500 futures contract is jumping higher, indicating a potential relief rally.
- This appears to be a technical rebound rather than a reversal of the downtrend.
- In my opinion, the short-term outlook is neutral.
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Paul Rejczak
Stock Trading Strategist