Stocks continued their uptrend yesterday, closing 1.61% higher and surpassing the 5,500 level. The market has almost erased all the declines from the August 1 high of 5,566.16.
The rebound caught many traders by surprise, leading to the question: Will the market keep climbing to new highs, or will it reverse and retrace the rally? As of now, there are no confirmed negative signals; however, the S&P 500 is expected to open 0.6% lower today based on futures contracts.
Previously, I mentioned, “It still appears to be a correction following a decline that started in mid-July; however, the market may also advance towards a double-top or new highs.”
Investor sentiment has improved, with 42.5% of individual investors feeling bullish and 28.9% feeling bearish, down from 37.5% last week. The S&P 500 index is close to its early August high, as seen on the daily chart.
Nasdaq 100 Approaches 19,500
The Nasdaq 100 accelerated its uptrend on Tuesday, fluctuated on Wednesday, and rallied yesterday, closing 2.46% higher. Today, it is expected to open 0.2% lower with resistance at 19,500-19,550.
VIX: Closer to 15
The VIX, a measure of market fear, hit a high of 65.73 last Monday but has since dropped to 14.77, indicating reduced fear. A falling VIX suggests less fear and potentially market upturns.
Futures Contract Nears 5,500
The futures contract accelerated its uptrend yesterday, reaching a new high of 5,583. Today, there might be a slight retracement, but the market could pull back to 5,500.
Conclusion
In my Stock Price Forecast for August, I mentioned “a sharp reversal occurred, and by the end of the month, the S&P 500 experienced significant volatility following the sell-off. August is beginning on a very bearish note, but the market may find a local bottom at some point.”
The rebound from last Monday has been strong, but it may still be a correction within the downtrend. If the market breaks above the early August high, new record highs could be on the horizon.
Last Friday, I noted “(…) rebound brought some hope for bulls, but it seems they are not out of the woods yet. The recent sell-off was significant, and it will likely take more time to recover. There is also a chance that the current advances are merely an upward correction, and the market could revisit its lows at some point.”
Short-term outlook remains neutral with the S&P 500 index reaching new highs and potential retracement today. In my view, the market is still in an uptrend, despite short-term fluctuations.