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Stocks: Mixed sentiment following Fed decision and earnings reports

The stock market is likely to open lower today, but bulls may attempt to resume the short-term uptrend despite the negative reaction to earnings releases.

The S&P 500 index gained 0.28% on Wednesday in a relatively calm trading session, despite the Fed’s interest rate decision and the press conference by Fed Chair Warsh. After the market close, several major earnings reports were released. GOOG shares sold off, while MSFT shares gained. Today, the S&P 500 is expected to open 0.4% lower.

Investor sentiment has improved, as reflected in yesterday’s AAII Investor Sentiment Survey, which reported that 37.8% of individual investors are bullish, while 41.4% are bearish.

The S&P 500 index continued its short-term uptrend yesterday, as shown on the daily chart.

Chart

S&P 500 futures contract: Pulling back from above the 7,800 level

This morning, the S&P 500 futures contract is trading lower, retracing yesterday’s advance amid a mixed reaction to tech earnings releases.

Resistance is at 7,800-7,820, while a support is at 7,740, among other levels.

Chart

Market outlook: Still within a medium-term consolidation

The S&P 500 index is likely to fluctuate following its recent advance as investors await further quarterly earnings reports from major tech companies. Today, we will get earnings results from AMZN and INTC.

So far, price action suggests that the index is extending the consolidation that began in early August.

Here's what I think is most likely:

  • The S&P 500 index retraced more of its recent declines yesterday, but in the short term, it may move sideways.
  • My Volatility Breakout System is currently long in the market.

What this means for your portfolio

 For individual investors, this environment calls for careful position management. While the market continues to advance, the combination of low volatility, seasonal weakness signals, and stretched valuations suggests that defensive positioning may become increasingly important in the weeks ahead.


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Author

Paul Rejczak

Paul Rejczak

Gold Price Forecast

Paul Rejczak is a stock market strategist who has been known for the quality of his technical and fundamental analysis since the late nineties.

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