Is the S&P 500's rebound just a false dawn? With geopolitical tensions rising and investor sentiment plummeting, find out what lies ahead for the market.
Will stocks continue their downtrend?
Stocks reversed sharply lower on Monday, retracing their Friday rebound and reaching new local lows. The S&P 500 index closed 1.76% lower, dipping to a low of 5,810.91. Today, the S&P 500 is set to open 0.7% lower as geopolitical events increase uncertainty. Markets will also be awaiting President Trump’s speech in Congress, scheduled for 9:00 p.m.
Investor sentiment worsened considerably last week, as shown by Wednesday’s AAII Investor Sentiment Survey, which reported that only 19.4% of individual investors are bullish, while 60.6% of them are bearish.
The S&P 500 has resumed its downtrend, despite Friday’s sharp rebound, as we can see on the daily chart.
S&P 500 Futures Contract Resumes Its Downtrend
This morning, the S&P 500 futures contract is trading at a new local low after dropping back below the 5,900 level. Resistance is now at 5,880–5,900, marked by recent local highs.
Conclusion
Stocks are expected to open lower today, extending their downtrend. Is the market headed much lower? 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 retraced its Friday’s rebound, adding to uncertainty.
- 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