The stock market saw a slight rebound on Friday, with the S&P 500 index closing 1.11% higher, although it closed well below the daily high. This could indicate consolidation rather than a definitive change in the short-term trend. The market may see another attempt at reversing the downtrend this morning, with the S&P 500 likely to open 0.6% higher.
This week, the focus will be on key quarterly earnings releases from companies like AMD, MSFT, META, AMZN, and AAPL. These earnings reports are expected to influence market sentiment. In addition, the important FOMC release on Wednesday is likely to bring volatility to the market.
Investor sentiment has deteriorated in the past week, as indicated by the AAII Investor Sentiment Survey. More individual investors are bearish compared to previous weeks, which could signal a shift in market sentiment. The stock market has been experiencing volatility, and a downward correction might be on the horizon.
Technical Analysis
The S&P 500 index remained below the 5,500 level on Friday, with a decline of 0.83% compared to the previous Friday’s closing price. The market broke below its upward trend line, signaling a potential correction or consolidation. The Nasdaq 100 index retraced its decline on Friday, indicating the possibility of rebound attempts following key earnings releases.
Market Fear and Volatility
The VIX index, a measure of market fear, has been fluctuating in recent weeks. A dropping VIX could signal less fear in the market, while a rising VIX might accompany stock market downturns. However, a low VIX could also lead to a downward reversal in the market.
Short-Term Market Outlook
The S&P 500 futures contract has been experiencing volatility following its recent decline. The market is currently trading near the resistance level at 5,550, with support at 5,480-5,500. Sentiment improvement could suggest a potential upward correction in the market, driven by key earnings releases and the FOMC release on Wednesday.
The stock market is poised for volatility in the coming week, with key earnings releases and the FOMC decision likely to influence market trends. Investor sentiment has shifted, signaling a more cautious approach to trading. While the short-term outlook remains bearish, a potential upward correction could be on the horizon.
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