Stock Market Update: Tensions in the Middle East Impact Trading
The stock market retraced its gains from Friday as tensions escalated in the Middle East conflict, with the S&P 500 losing 0.96%. However, it remained within its recent trading range. This morning, it is expected to open 0.4% higher, further extending its sideways movement.
Market Analysis and Forecast
- The market appears to be forming a top, with the seasonal pattern suggesting a correction low may occur in October.
- Investor sentiment slightly worsened last week, as shown by the AAII Investor Sentiment Survey, reporting 45.5% of individual investors as bullish and 27.3% as bearish.
- The S&P 500 continues to trade within a consolidation phase, as indicated by the daily chart.
Nasdaq 100 Pulled Back Below 20,000 Again
The Nasdaq 100 lost 1.17% on Monday after gaining 1.2% on Friday. It remains in consolidation around the 20,000 level but pulled back below that mark yesterday. This morning, the Nasdaq 100 is expected to open 0.4% higher, with resistance at 20,250.
VIX Moved Higher: Market Fear Indicators
- On September 6, the VIX reached a local high of 23.76, indicating elevated fear among investors.
- A stock rebound followed by a record-breaking rally pushed the VIX lower, but it climbed again yesterday to 23.03, signaling rising investor fear.
- Historically, a dropping VIX indicates less fear in the market, while a rising VIX accompanies stock market downturns.
Futures Contract Continues Moving Sideways
Looking at the hourly chart of the futures contract, it pulled back to the support level around 5,725 on Monday but is now trading around the 5,750-5,770 level. Resistance remains at 5,800, and the market’s direction remains inconclusive.
Conclusion and Forecast
Today’s session is likely to start positively, with the S&P 500 rebounding after a decline on Monday. The market may approach its recent highs and the 5,800 level again, continuing its consolidation.
Investors are anticipating economic data releases and the upcoming quarterly earnings season. The market’s direction remains uncertain, with questions about a possible topping pattern or further consolidation.
In summary:
- The S&P 500 is expected to rebound and extend its consolidation phase.
- The market may be forming a topping pattern before a potential downward correction.
- The short-term outlook is bearish.
Stay tuned for updates on market trends and potential trading opportunities.