The Thursday trading session brought another record-breaking advance for the stock market, additionally fueled by the FOMC's interest rate cut. The S&P 500 index gained 0.74%, reaching a new record high of 5,983.84. However, the Fed announcement did little to sustain a rally, as the market moved sideways afterward. This morning, S&P 500 futures indicate a 0.1% lower opening, suggesting potential fluctuations and consolidation.

The investor sentiment improved once again, as shown in the Wednesday’s AAII Investor Sentiment Survey, which reported that 41.5% of individual investors are bullish, while 27.6% of them are bearish.

The S&P 500 keeps reaching new records after Wednesday’s breakout, as we can see on the daily chart.

Chart

Nasdaq 100: New records above 21,000

The Nasdaq 100 gained 1.54% yesterday, extending Wednesday’s 2.7% rally and hitting a record high of 21,132.80. Today, it is expected to open 0.2% lower and may consolidate. The support level is now between 20,800 and 20,900, marked by yesterday’s gap up.

Chart

VIX dipped near 15

The VIX index, a measure of market volatility, declined by over 20% on Wednesday, moving back below the 20 level and nearing the 15 level. This confirmed risk-on sentiment and a lack of fear in the market.

Historically, a dropping VIX indicates less fear in the market, and rising VIX accompanies stock market downturns. However, the lower the VIX, the higher the probability of the market’s downward reversal. Conversely, the higher the VIX, the higher the probability of the market’s upward reversal.

Chart

Futures contract flirting with 6,000

The S&P 500 futures contract is approaching new highs this morning, surpassing the 6,000 level. Support remains at 5,900-5,920, marked by recent highs. Although the market appears overbought in the short term, no confirmed negative signals are evident.

Chart

Conclusion

Stocks rallied following the election results, raising the question: Is this the start of a new uptrend or the final phase of a multi-month advance? End-of-year seasonality still supports the bullish outlook. There may be a pullback due to short-term overbought conditions; however, no negative signals are evident.

In my Stock Price Forecast for November 2024, I wrote “The key question is: Will this sell-off mark the start of a medium-term downtrend, or is it merely a downward correction within an uptrend? For now, it appears to be a correction, but next week’s presidential elections could add to volatility.”

For now, my short-term outlook is neutral.

Here’s the breakdown:

  • The S&P 500 extended its record-braking advance.

  • The market showed minimal reaction to the Fed rate decision and may enter a short-term consolidation.

  • In my opinion, the short-term outlook is neutral.


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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' employees and associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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