August 12, 2024 (Investorideas.com Newswire) Shares prolonged their rebound on Friday, with the S&P 500 index reaching an area excessive of 5,358.67 and shutting 0.47% increased. The market has retraced extra of its latest declines, however is that this the beginning of a brand new uptrend or only a correction earlier than one other leg decrease? Immediately, the S&P 500 is prone to open 0.2% increased, as traders await key inflation knowledge this week: the Producer Value Index tomorrow and the essential Shopper Value Index on Wednesday.
The investor sentiment worsened final week, as indicated by Wednesday’s AAII Investor Sentiment Survey, which confirmed that 40.5% of particular person traders are bullish, whereas 37.5% of them are bearish – up from 25.2% final week.
The S&P 500 index rebounded from the 5,100 stage final week, as we are able to see on the every day chart.
S&P 500 Retraced All Losses from Final Week
In comparison with the earlier Friday’s closing worth, the index misplaced simply 0.04%, however final Monday, it was buying and selling over 4% decrease. Total, it was a constructive week for shares, and such a rebound favors the bullish facet within the close to future.
On July 15, I wrote that “there are indicators that the market is preparing for a correction or a consolidation” and it proved right. The index broke beneath its months-long upward development line.
Nasdaq 100: Above 18,500
The technology-focused Nasdaq 100 gained 0.54% on Friday, extending its Thursday rally of over 3%. It recovered from Wednesday’s sell-off and closed the week 0.4% increased. This morning, the Nasdaq 100 is prone to open 0.3% increased, barely extending its short-term uptrend.
It is doubtless that the market will expertise extra consolidation, though many traders hope for a V-shaped rally from the present ranges.
VIX Is Nearer to twenty Once more
The VIX index, a measure of market worry, accelerated its advance on earlier Friday, nearing 30, and final Monday, it reached as excessive as 65.73-the highest stage for the reason that 2008 monetary disaster and the COVID sell-off in 2020. This mirrored important worry available in the market. Nevertheless, on Friday, the VIX dipped nearer to the 20 stage, additional lowering market volatility.
Traditionally, a dropping VIX signifies much less worry available in the market, and rising VIX accompanies inventory market downturns. Nevertheless, the decrease the VIX, the upper the chance of the market’s downward reversal. Conversely, the upper the VIX, the upper the chance of the market’s upward reversal.
Futures Contract Creeping Increased
Let’s check out the hourly chart of the S&P 500 futures contract. Final Monday, it traded as little as 5,120, rebounded to round 5,360 on Wednesday, then pulled again beneath 5,200 earlier than rebounding to native highs above 5,380. Nevertheless, Friday’s buying and selling motion was a lot calmer, and volatility decreased. Is that this an indication of a failing rebound? The important thing resistance stage stays round 5,430, marked by the earlier native lows.
Conclusion
In my Inventory Value Forecast for August, I famous “a pointy reversal occurred, and by the top of the month, the S&P 500 skilled important volatility following the sell-off. August is starting on a really bearish be aware, however the market could discover a native backside in some unspecified time in the future.”
Inventory costs are set to open barely increased, extending final week’s rebound. Nevertheless, the market could expertise consolidation as traders await key inflation knowledge tomorrow and on Wednesday. Wednesday is prone to deliver a return of market volatility.
On Friday, I wrote “(…) rebound introduced some hope for bulls, but it surely appears they don’t seem to be out of the woods but. The latest sell-off was important, and it’ll doubtless take extra time to get well.
There may be additionally an opportunity that the present advances are merely an upward correction, and the market might revisit its lows in some unspecified time in the future.”
Final week’s buying and selling motion was fairly bullish following a decrease opening on Monday, and this week, we might even see extra uncertainty and volatility in each instructions.
My short-term outlook is now impartial.
This is the breakdown:
- The S&P 500 index reached its lowest stage since early Could final Monday; since then, the market has been rebounding.
- The market discovered a short-term backside, however this will likely solely be non permanent; no constructive alerts are evident.
- For my part, the short-term outlook is impartial.
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