Stocks Continue to Rise as S&P 500 Retraces August Sell-Off
Monday saw another day of gains for the stock market, with the S&P 500 rising 0.97% and retracing more of its sell-off from July to early August. The market continues its climb after a brief crisis at the start of August, surprising many traders. The question now is whether the market will continue to new highs or reverse course and retrace the recent rally. For now, there are no confirmed negative signals, and futures suggest a likely flat open this morning.
Although no negative signals have been confirmed, a speculative short position was opened at the beginning of today’s cash market session.
Last Thursday, it was mentioned that the market may be experiencing a correction following a decline that started in mid-July, with a possibility of advancing towards a double-top or new highs. This prediction remains accurate as we could see a medium-term consolidation following early August volatility.
Investor sentiment improved, as indicated by the AAII Investor Sentiment Survey showing that 42.5% of individual investors are bullish and 28.9% are bearish. The S&P 500 index broke above its August 1 local high on Monday.
Nasdaq 100 Approaching 20,000 Level Again
The Nasdaq 100 gained 1.32% on Monday, reaching a local high of 19,767.43. It has continued to advance, although it remains relatively weaker after the early August sell-off. The index is being driven higher by a few key stocks, including NVDA. This morning, the Nasdaq 100 is likely to open 0.1% higher, with the resistance level around 20,000.
VIX Remains Close to 15
The VIX, a measure of market fear, reached a new long-term high last Monday but has since dropped to 14.46, indicating less fear in the market. Historically, a dropping VIX suggests less fear and rising VIX accompanies stock market downturns.
Futures Contract Broke Above 5,600
The S&P 500 futures contract broke above the 5,600 level, accelerating its uptrend once again. The market appears to be heading towards new record highs but is becoming increasingly overbought and susceptible to a short-term correction.
Conclusion
The rebound from the previous Monday’s low has been significant, with bulls regaining control of the market. The S&P 500 breaking above its August high may be a bullish sign, but there is an increasing likelihood of reaching a top soon. In the short term, a flat open is expected today, possibly leading to a sideways trading session. The short-term outlook remains bearish.
Breakdown:
- The S&P 500 index is accelerating its short-term uptrend, nearing its all-time high from July.
- Today’s market is likely to open flat, with a potential correction looming.
- The short-term outlook is bearish.