🥇 First rule of investing? Know when to save! Up to 55% off InvestingPro before BLACK FRIDAYCLAIM SALE

Stocks Rallied: What's Next for the Market?

Published 11/08/2024, 08:55 AM
NDX
-
US500
-

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 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.S&P 500-Daily 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.Nasdaq 100-Daily 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.VIX Index-Daily 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.S&P 500 futures-1-Hour 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.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.